1/1/12 You issue S4 ,000,000 of six-year, 12% bonds. The market rate is 13%. dis

Question

1/1/12 You issue S4 ,000,000 of six-year, 12% bonds. The market rate is 13%. discount amount is $163,185. The Correct Date 1/1/12 Cash Debit 3.836,815 163,185 Credit Discount on Bonds Payable Bonds Payable 4,000,000 Carrying amount 3,836,815 630/12 You pay the semi-annual interest to the bondholders. (You would normally repeat this every six months, omit these entries to save time.) Correct Date Account Debit 240,000 Credit 630/12 Interest expense Cash 240,000 12/31/12 You record the adjusting entry to amortize the discount (to the nearest dollar) Correct Date 12/31/12 Interest Expense Debit 27.198 Credit 27,198 Carrying amount $ 3,864,013 12/31/13 You record the adjusting entry to amortze the discount (to the nearest dollar). Correct Debit 27,198 12/31/13 Interest Expense Discount on Bonds Payable 27.198 Carrying amount $ 3,891,211 12/31/13 You call the bonds at 99. Date 2/31/13 Bonds Payable Credit of bonds 123,185 discount on bonds payable 108,789 Carrying amount$

Explanation / Answer

12/31/13 Bonds payable 4000000 Loss on redemption of bonds 68789          Discount on bonds payable 108789           Cash 3960000

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.