Question

On January 1, 2022, Swifty Corporation issued $1,810,000 face value, 6%, 10- year bonds at $1,682,873. This price resulted in an effective-interest rate of 7% on the bonds. Swifty uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1.

Prepare the journal entry to record the issuance of the bonds on January 1, 2022. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount

  

  

Prepare an amortization table through December 31, 2024 (three interest periods) for this bond issue. (Round answers to 0 decimal places, e.g. 125.)

SWIFTY CORP. Bond Discount Amortization Effective-Interest Method—Annual Interest Payments
Annual Interest Periods		Interest to Be Paid		Interest Expense to Be Recorded		Discount Amortization		Unamortized Discount		Bond Carrying Value
Issue date		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
1		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
2		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
3		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount

  

  

Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2022. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount

  

  

Prepare the journal entry to record the payment of interest on January 1, 2023. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount

  

  

Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2023. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount

Answer 1

Swifty corporation
Part 1 - Table values are based on :
n = 10
I = 7%
Cash flow	Table value	Amount	Present Value
Par value	0.5083	1810000	920023
Interest	7.02358	108600	762760.788	( 1810000 * 6% )
Issue Price			1682783.788	Issue price
Entry :-
Cash	1682784
Discount on Bonds payable	127216
Bonds payable		1810000
Bond Amortisation schedule
Date	A.Cash paid	B.Intt. Exp.( carrying value * 7%) ( debit )	C. Discount on Bonds payable (b - a) ( credit )	D. Unamo. Bond Discount (Preceeding D - C)	E.Carrying value
Issue date				127216	1682784
Dec.31,22	108600	117795	9195	118021	1691979
Dec.31,23	108600	118439	9839	108182	1701818
Dec.31,24	108600	119127	10527	97655	1712345
Dec.31,25	108600	119864	11264	86391	1723609
Dec.31,26	108600	120653	12053	74338	1735662
Dec.31,27	108600	121496	12896	61442	1748558
Dec.31,28	108600	122399	13799	47643	1762357
Dec.31,29	108600	123365	14765	32878	1777122
Dec.31,30	108600	124399	15799	17079	1792921
Dec.31,31	108600	125679	17079	0	1810000
Dec. 31, 22	Intt. Exp.	117795
	Discount on Bonds payable		9195
	Intt. Payable		108600
Jan.1,2023	Intt. Payable	108600
	Cash		108600
Dec. 31, 23	Intt. Exp.	118439
	Discount on Bonds payable		9839
	Intt. Payable		108600