Recording Bond Entries and Preparing an Amortization ScheduleEffective Interest Method, Premium

Mitchell Inc. issued 24, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest annually each December 31 and were issued to yield 5%. The bonds mature December 31, 2024, and the company uses the effective interest method to amortize bond discounts or premiums.

Required

a. Determine the selling price of the bonds.Round amount to the nearest whole dollar.

b. Prepare amortization schedule for the full bond term.

c. Prepare journal entries on the following dates.

1. January 1, 2020, bond issuance.

2. December 31, 2020, interest payment.

3. December 31, 2021, interest payment.

• Bond Selling Price
• Amortization Schedule
• Journal Entries

a.

Selling price of bonds

Answer

• Bond Selling Price
• Amortization Schedule
• Journal Entries

b.

• Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations in the schedule.
• Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for Dec. 31, 2024.

Date	Cash	Interest Expense	Discount Amortization	Bonds Payable, Net
Jan. 1, 2020				Answer
Dec. 31, 2020	Answer	Answer	Answer	Answer
Dec. 31, 2021	Answer	Answer	Answer	Answer
Dec. 31, 2022	Answer	Answer	Answer	Answer
Dec. 31, 2023	Answer	Answer	Answer	Answer
Dec. 31, 2024	Answer	Answer	Answer	Answer
Total	Answer	Answer	Answer

c.

• Note: List multiple debits or credits (when applicable) in alphabetical order.
• Note: Round your answers to the nearest whole dollar.

	Date	Account Name	Dr.	Cr.
1.	Jan. 1, 2020	AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
2.	Dec. 31, 2020	AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
3.	Dec. 31, 2021	AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		AnswerCashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI	Answer	Answer
		Answer