121/2017 Problem 10-9A *Problem 10-9A Cullum ber Company sold $3,340,000, 9%, 10

Question

121/2017 Problem 10-9A *Problem 10-9A Cullum ber Company sold $3,340,000, 9%, 10-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1, The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 105 and (2) 95. (Credit account tities are automatically indented when amount is entered. Do not indent manually.) No. Date Account Tites and Explanation Debit Credit Prepare amortization table for issuance of the bonds sold at 105 for the first three interest payments. Annual Interest Interest to Interest Expense Premium Unamortized Periods Bond Be Paid to Be Recorded Amortization Premium Carrying Value Issue date 2 3 Prepare amortization table for issuance of the bonds sold at 95 for the first three interest payments. Annual Interest Interest to Interest Expense Discount Unamortized Periods Bond Be Paid to Be Recorded Amortization Discount Carrying Value Issue date 2 Prepare the journal entries to record interest expense for 2017 under both of the bond issuances assuming they sold at: (1) 105 and (2) 95. (Credit account tites are automatically indented https:lledugen.wileyplus.com edugenisharedfassignmenties gprint.uni 1/2

Explanation / Answer

NO Date Account titles & Explanations Debit Credit 1 1/1/2017 Cash (3,340,000*1.05) 3507000 premium on bonds payable 167,000 Bonds payable 3,340,000 2 1/1/2017 Cash (3,340,000*.95) 3173000 Discount on bonds payable 167,000 Bonds payable 3,340,000 annual interest to interest premium unamrotised bond interest be paid expense amortization CV periods issue date 167,000 3507000 1 300600 283900 16700 150,300 3490300 2 300,600 283,900 16,700 133,600 3473600 3 300,600 283,900 16,700 116,900 3456900 annual interest to interest discount unamrotised bond interest be paid expense amortization CV periods issue date 167,000 3173000 1 300,600 317,300 16700 150,300 3189700 2 300,600 317,300 16,700 133,600 3206400 3 300,600 317,300 16,700 116,900 3223100 NO Date Account titles & Explanations Debit Credit 1 12/31/2017 interest expense 283,900 premium on bonds payable 16,700 interest payable 300,600 2 12/31/2017 interest expense 317,300 discount on bonds payable 16,700 interest payable 300,600 Balance sheet (partial) as on dec 31,2017 long term liabilities Bonds payable 3,340,000 Add: unamortized premium on bonds 150,300 3,490,300 Balance sheet (partial) as on dec 31,2017 long term liabilities Bonds payable 3,340,000 less: unamortized discount on bonds 150,300 3,189,700

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