On January 1, 2006 Anthony, Inc. issued a bond of$10,000 for $10,900 cash. The b

Question

On January 1, 2006 Anthony, Inc. issued a bond of$10,000 for $10,900 cash. The bond has a life of 5 years and 8%coupon rate. The bond was dated on January 1, 2006. Interests areaccrued annually and paid on January 15th the followingyear. The market interest rate was 6%. The company providesfinancial statements on a calendar year basis, and it useseffective-interest method for amortization on bonds. You are tocomplete the following entries: (round to the nearest dollar.)

(a)

Was the bond issued at par, at a premium, or at adiscount?

(b)

Journal entry at January 1, 2006--Date of issuance:

(c)

Journal entry at December 31, 2006:

(d)

Journal entry at January 15, 2007:

(e)

What is the carrying amount (book value) of the bonds onDecember 31, 2007?

(f)

Journal entry at December 31, 2007:

(g)

Where and how on the balance sheet are the bonds payablereported?

(h)

On what date do the bonds mature?

(a)

Was the bond issued at par, at a premium, or at adiscount?

(b)

Journal entry at January 1, 2006--Date of issuance:

(c)

Journal entry at December 31, 2006:

(d)

Journal entry at January 15, 2007:

(e)

What is the carrying amount (book value) of the bonds onDecember 31, 2007?

(f)

Journal entry at December 31, 2007:

(g)

Where and how on the balance sheet are the bonds payablereported?

(h)

On what date do the bonds mature?

Explanation / Answer

(a)At a premium

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