PTER 17 7-A3 Bonds: Journal entries, issuance through retirement (L.O. 2, 5, 6) The following information...

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PTER 17 7-A3 Bonds: Journal entries, issuance through retirement (L.O. 2, 5, 6) The following information relates to a bond issue of Transamerican, Inc.. Date of bonds Issue date Maturity date Face amount Proceeds from issuance Interest payment dates Contract (nominal) interest rate Amortization method May 31, 19X4 June 30, 19X4 May 31, 19X7 $800,000 $814,000, plus accrued interest May 31, November 30 12% Straight-line Transamerican will amortize the premium over the 35 months that the bonds are expected to be outstanding. Instructions a Prepare journal entries to record (1) the bond issuance on June 30, 19X4, (2) the semiannual interest payment and premium amortization on No- vember 30, 19X4; and (3) accrued interest and premium amortization on December 31, 19X4. b Compute total bond interest expense for 19X4. c What is the net carrying value of Transamerican's bonds on December 31, 19X4? Show how this amount would be disclosed on the company's year-end balance sheet. d Prepare journal entries to record the semiannual interest payment and premium amortization on May 31, 19X5. e Assume that the entire bond issue was called at 103, plus accrued inter- est, on September 30, 19X5. Prepare journal entries to record the bond retirement. Hint: Examine when amortization was last recorded. Amortiza PTER 17 7-A3 Bonds: Journal entries, issuance through retirement (L.O. 2, 5, 6) The following information relates to a bond issue of Transamerican, Inc.. Date of bonds Issue date Maturity date Face amount Proceeds from issuance Interest payment dates Contract (nominal) interest rate Amortization method May 31, 19X4 June 30, 19X4 May 31, 19X7 $800,000 $814,000, plus accrued interest May 31, November 30 12% Straight-line Transamerican will amortize the premium over the 35 months that the bonds are expected to be outstanding. Instructions a Prepare journal entries to record (1) the bond issuance on June 30, 19X4, (2) the semiannual interest payment and premium amortization on No- vember 30, 19X4; and (3) accrued interest and premium amortization on December 31, 19X4. b Compute total bond interest expense for 19X4. c What is the net carrying value of Transamerican's bonds on December 31, 19X4? Show how this amount would be disclosed on the company's year-end balance sheet. d Prepare journal entries to record the semiannual interest payment and premium amortization on May 31, 19X5. e Assume that the entire bond issue was called at 103, plus accrued inter- est, on September 30, 19X5. Prepare journal entries to record the bond retirement. Hint: Examine when amortization was last recorded. Amortiza