Question

(FORECAST) Chicago Company issued a 3-year term on January 1, 2017, with 10% nominal interest, 200,000 TL nominal value bond sold for 190.393 TL. The main currency of the bond is at one time, and interest rates start from 2017 on 31 December of each year will be paid. The market interest rate is 12%.

Requested: Make all the journal ledger records that the Chicago Administration must make in 2017, 2018. 31.12.2017 of these records,

Show the impact of their Balance Sheets dated 31.12.2018 and the 2017, 2018 Profit or Loss Statements.

Answer 1

Amortization Schedule
Date	Interest Paid @10%	Interest Expense @12%	Amortization of discount	Discount on bond	Carrying Amount TL
01-01-2017				9,607	190,393
31-12-2017	20,000	22,847	2,847	6,760	193,240
31-12-2018	20,000	23,189	3,189	3,571	196,429
31-12-2019	20,000	23,571	3,571	0	200,000
Journal Entries
Date	Account Titles	Debit TL	Credit TL
01-01-2017	Cash	190,393
	Discount on Bond	9,607
	Bond Payable		200,000
31-12-2017	Interest Expense	22,847
	Discount on Bond		2,847
	Cash		20,000
31-12-2018	Interest Expense	23,189
	Discount on Bond		3,189
	Cash		20,000
Balance Sheets
Year	2017	2,018
Bond payable	200,000	200,000
Less: Discount on Bond	6,760	3,571
Carrying Amount	TL 193,240	TL 196,429
Profit & loss Account
Year	2017	2,018
Interest Expense	TL 22,847	TL 23,189