Master Corp. issued 5%, $660,000 bonds on January 1, 2020. The bonds pay cash interest semiannually...

  

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Master Corp. issued 5%, $660,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Prepare journal entries on the following dates. 1. January 1, 2020-Issuance of bonds. 2. July 1. 2020-Interest payment. 3. December 31, 2020-Interest accrual. 4. January 1, 2021-Interest payment. b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $610,460 (excluding accrued interest). Hint: Armortize discount on bonds payable over a 118 month bond term. Effective Interest Method Straight-Line Interest Method Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. 1. Mar. 1, 2020 Cash 611,420 x Discount on Bonds Payable 49,540 v Bonds Payable 660,000 Interest Payable 11,305 x 2. Jul. 1, 2020 Interest Expense Interest Payable 0 x Cash 16,500 v Discount un Bonds Payable 3. Dec. 31, 2020 Interest Expense 수 Discount un Bonds Payable Interest Payable 스 16,500 4. Jan. 1, 2021 Interest Payable 16,500 Cash 16,500 Master Corp. issued 5%, $660,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Prepare journal entries on the following dates. 1. January 1, 2020-Issuance of bonds. 2. July 1. 2020-Interest payment. 3. December 31, 2020-Interest accrual. 4. January 1, 2021-Interest payment. b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $610,460 (excluding accrued interest). Hint: Armortize discount on bonds payable over a 118 month bond term. Effective Interest Method Straight-Line Interest Method Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. 1. Mar. 1, 2020 Cash 611,420 x Discount on Bonds Payable 49,540 v Bonds Payable 660,000 Interest Payable 11,305 x 2. Jul. 1, 2020 Interest Expense Interest Payable 0 x Cash 16,500 v Discount un Bonds Payable 3. Dec. 31, 2020 Interest Expense 수 Discount un Bonds Payable Interest Payable 스 16,500 4. Jan. 1, 2021 Interest Payable 16,500 Cash 16,500

Answer rating: 100% (QA)

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