On June 30, 2020, Pronghorn Company issued $3,270,000 face value of 13%, 20-year bonds at $3,516,000, a
Question:
On June 30, 2020, Pronghorn Company issued $3,270,000 face value of 13%, 20-year bonds at $3,516,000, a yield of 12%. Pronghorn uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.
(a)
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Your answer is correct.
Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| (1) | The issuance of the bonds on June 30, 2020. | |
| (2) | The payment of interest and the amortization of the premium on December 31, 2020. | |
| (3) | The payment of interest and the amortization of the premium on June 30, 2021. | |
| (4) | The payment of interest and the amortization of the premium on December 31, 2021. |
No. | Date | Account Titles and Explanation | Debit | Credit |
| (1) | June 30, 2020 | |||
| (2) | December 31, 2020 | |||
| (3) | June 30, 2021 | |||
| (4) | December 31, 2021 | |||
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(b)
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Your answer is partially correct.
Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)
Pronghorn Company | |||
Current Assets Current LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity | |||
$ | |||
Book Value of Bonds PayableNotes PayableCashBad Debt ExpenseLoss on Redemption of BondsPremium on Bonds PayableInterest PayableInterest ExpenseNotes ReceivableDiscount on Notes Payable | $ | ||
Expert Answer:
Workings Amortization Formula Account Title Date 30Jun20 Cash Bonds Payable Premium on bond... View the full answer
