At 31 December 20X8, Northern Resources Ltd. reports the following on its statement of financial position: Bonds
Question:
At 31 December 20X8, Northern Resources Ltd. reports the following on its statement of financial position:
| Bonds payable, 4%, interest payable semi-annually on 30 June and 30 December | $ | 9,400,000 | |
| Discount on bonds payable | 470,000 | ||
| $ | 8,930,000 | ||
The effective interest rate, or market interest rate, was 6% on issuance. On 1 March 20X9, 30% of the bond issue was bought back in the open market and retired at 101 plus accrued interest. The following table relates to 20X9 (numbers have been rounded):
| Amortization Schedule, Effective-Interest Method: | |||||||||||
| Interest Period | Cash Interest | Interest Expense | Premium Amortization | Balance Unamortized Premium | Carrying Amount of Bonds | ||||||
| reporting date(above) | $ | 470,000 | $ | 8,930,000 | |||||||
| 1 | $ | 188,000 | $ | 267,900 | $ | 79,900 | 390,100 | 9,009,900 | |||
| 2 | 188,000 | 270,297 | 82,297 | 307,803 | 9,092,197 | ||||||
Required:
Provide the entries to record:
1. Interest paid to the date of retirement on the 30% of bond retired. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)
2. Bond retirement. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)
3. Interest on 30 June 20X9 for the portion of the bond still outstanding. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.
Expert Answer:
