Refer to the bond details in Problem 14-5B. Required 1. Prepare the January 1, 2017, journal entry
Question:
Refer to the bond details in Problem 14-5B.
Required
1. Prepare the January 1, 2017, journal entry to record the bonds' issuance.
2. Determine the total bond interest expense to be recognized over the bonds' life.
3. Prepare an effective interest amortization table like the one in Exhibit 14B.1 for the bonds' first two years.
4. Prepare the journal entries to record the first two interest payments.
Exhibit 14B.1
Transcribed Image Text:
A. Bonds: $100,000 Par Value, Semiannual Interest Payments, Two-Year Life, 4% Semiannual Contract Rate, 5% Semiannual Market Rate 2 (A) (B) (C) (D) (E) Cash Bond 4 Interest Interest Discount Unamortized Carrying Value Semiannual Discount Paid Expense Amortization Interest 5% x Prior (E) Period-End 4% x $100,000 (B) – CA) $100,00 – (D) Prior (D) – (C) $ 96,454 (0) $3,546 12/31/2017 $ 4,000/ $ 823- -$ 4,823 (1) 2,723 6/30/2018 97,277 98,141 (2) 864 1,859 12/31/2018 4,000 4,864 (3) 6/30/2019 4,907 99,048 907 10 4,000 952 (4) 4,000 4.952 11 12/31/2019 952 100,000 $16,000 $3,546 $19,546 12
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Part 1 2017 Jan1 Cash 198494 Discount on Bonds Payable 41506 Bonds Payable 240000 Sold bonds on stat...View the full answer
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Related Book For
Fundamental Accounting Principles
ISBN: 978-1259536359
23rd edition
Authors: John Wild, Ken Shaw, Barbara Chiappett
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