Question

In: Accounting

On June 1, 2017, Griffin Company issued $294,000 of 20-year, 7% bonds at 112. The bonds...

On June 1, 2017, Griffin Company issued $294,000 of 20-year, 7% bonds at 112. The bonds were dated June 1, 2017, and pay interest on June 1 and December 1. Griffin Company uses the straight-line method to amortize the discount or premium. Required: Assuming that the entry to amortize the discount or premium to date has been made, what is the carrying value of the bonds on December 31, 2023?

Solutions

Expert Solution

Carrying value of the bonds on December 31, 2023 = $ 331,926

Period Cash payment (Credit) Interest Expense (Debit) Discount on bond Premium on bond balance Bonds payable Carrying Value
June 1 2017 $ 35,280 $    3,29,280
Dec 31 2017 $ 10,290 $         9,408 $      882 $ 34,398 $    3,28,398
June 1 2018 $ 10,290 $         9,408 $      882 $ 33,516 $    3,27,516
Dec 31 2018 $ 10,290 $         9,408 $      882 $ 32,634 $    3,26,634
June 1 2019 $ 10,290 $         9,408 $      882 $ 31,752 $    3,25,752
Dec 31 2019 $ 10,290 $         9,408 $      882 $ 30,870 $    3,24,870
June 1 2020 $ 10,290 $         9,408 $      882 $ 29,988 $    3,25,752
Dec 31 2020 $ 10,290 $         9,408 $      882 $ 29,106 $    3,26,634
June 1 2021 $ 10,290 $         9,408 $      882 $ 28,224 $    3,27,516
Dec 31 2021 $ 10,290 $         9,408 $      882 $ 27,342 $    3,28,398
June 1 2022 $ 10,290 $         9,408 $      882 $ 26,460 $    3,29,280
Dec 31 2022 $ 10,290 $         9,408 $      882 $ 25,578 $    3,30,162
June 1 2023 $ 10,290 $         9,408 $      882 $ 24,696 $    3,31,044
Dec 31 2023 $ 10,290 $         9,408 $      882 $ 23,814 $    3,31,926

.

Bond issue price $    3,29,280.00
Face value $    2,94,000.00
Premium on Bonds payable $      (35,280.00)
Number of Interest payments (20 years x 2) 40
Discount to be amortized per payment $            (882.00)

Related Solutions

On June 30, 2017, Pearl Company issued $4,300,000 face value of 13%, 20-year bonds at $4,623,487,...
On June 30, 2017, Pearl Company issued $4,300,000 face value of 13%, 20-year bonds at $4,623,487, a yield of 12%. Pearl uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. 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...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010,...
On June 30, 2017, Novak Company issued $4,400,000 face value of 13%, 20-year bonds at $4,731,010, a yield of 12%. Novak uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. (1) What amount of interest expense is reported for 2018? (Round answer to 0 decimal places, e.g. 38,548.) (2) Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount...
On June 30, 2017, Crane Company issued $3,800,000 face value of 13%, 20-year bonds at $4,085,872,...
On June 30, 2017, Crane Company issued $3,800,000 face value of 13%, 20-year bonds at $4,085,872, a yield of 12%. Crane uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. 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...
On June 30, 2017, Bramble Company issued $3,300,000 face value of 13%, 20-year bonds at $3,548,257,...
On June 30, 2017, Bramble Company issued $3,300,000 face value of 13%, 20-year bonds at $3,548,257, a yield of 12%. Bramble uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. 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...
On June 30, 2017, Mischa Auer Company issued $4,200,000 face value of 13%, 20-year bonds at...
On June 30, 2017, Mischa Auer Company issued $4,200,000 face value of 13%, 20-year bonds at $4,515,964, a yield of 12%. Auer uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Instructions (Round answers to the nearest cent.) (a)  Prepare the journal entries to record the following transactions. 1.The issuance of the bonds on June 30, 2017. 2.The payment of interest and the amortization of the premium on December...
Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is...
Sandhill Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Sandhill Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (a)The issuance of the bonds. (b)The payment of interest and related amortization on July 1, 2017. (c)The accrual of interest and the related amortization on December 31, 2017.
Rico company issued $400,000, 9%, 20 year bonds on january 1, 2017, at 103. Interest is...
Rico company issued $400,000, 9%, 20 year bonds on january 1, 2017, at 103. Interest is payable annually on January 1. Rico uses straight-line amortization for bond premium or discount. Instructions Show WORK Prepare the journal entries to record the following. a) The issuance of the bonds b) The accrual of interest and the premium amortization on december 31, 2017 c) The payment of interest on january 1, 2018 d) The redemption of the bonds at maturity, assuming interest for...
1) K Company  issued $672,000 of 11%, 20-year bonds on January 1, 2017, at 102. Interest is...
1) K Company  issued $672,000 of 11%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. K Company uses the straight-line method of amortization for bond premium or discount. Prepare journal entries for the following: a) The issuance of the bonds. b) The payment of interest and the related amortization on July 1,2017. c) The accrual of interest and the related amortization on December 31, 2017. 2) Coronado Co. sold $1,930,000 of...
On January 1, 2017, Bramble Company issued $ 1,820,000 face value,  7%,  10-year bonds at $ 1,953,954. This...
On January 1, 2017, Bramble Company issued $ 1,820,000 face value,  7%,  10-year bonds at $ 1,953,954. This price resulted in a  6% effective-interest rate on the bonds. Bramble uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1. Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. The issuance of...
On January 1, 2017, Blue Company issued $1,810,000 face value, 7%, 10-year bonds at $1,943,218. This...
On January 1, 2017, Blue Company issued $1,810,000 face value, 7%, 10-year bonds at $1,943,218. This price resulted in a 6% effective-interest rate on the bonds. Blue uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1. A. Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. The...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT