On January 1, 2016, Gates Corporation issued $300,000 of 5-year bonds due December 31, 2020, for $311,372.36
Question:
On January 1, 2016, Gates Corporation issued $300,000 of 5-year bonds due December 31, 2020, for $311,372.36 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs.
Required:
Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. Additional info: In 2016, there will be a total of 10 lines of journal entries. In 2017-2019, there will be 5 lines each. And in 2020, there should be 7 |
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura