Question: For Dingle Corporation, the following amortization table was prepared when $400,000 of five-year, 7 percent bonds were sold on December 31, 2011, for $420,000. Required:
For Dingle Corporation, the following amortization table was prepared when $400,000 of five-year, 7 percent bonds were sold on December 31, 2011, for $420,000.
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Required:
1. Prepare the entry to recognize the issuance of the bonds on December 31, 2011.
2. Prepare the entry to recognize the first interest payment on June 30, 2012.
3. Determine what interest expense for this bond issue Dingle will report in its 2013 income statement.
4. Indicate how these bonds will appear in Dingle's December 31, 2015, balance sheet.
Interest Premium on Payment Expense Bonds Payable Bonds Payable Carrying 06/30/12 $14,000 $12,000 6
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Journal Date Account and Explanation Debit Credit 1 2011 Dec 31 Cash 420000 Bonds Payable 400000 Premium on Bonds Payable 20000 Record issuance of bonds at premium 2 2012 June 30 Interest Expense 12000 Premium on Bonds Payable 2000 Cash 14000 Record interest expense 3 2013 interest expense 12000 2 24000 4 Reported among longterm liabilities at December 31 2015 Bonds payable 7 Bonds due 2016400000 Add Unamortized premium on bonds payable 4000 ... View full answer
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