Question

On January 1, 2020, Grouper Company sold 12% bonds having a maturity value of $550,000 for $591,698, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Grouper Company allocates interest and unamortized discount or premium on the effective-interest basis.

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Prepare the journal entry at the date of the bond issuance. (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.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2020

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List of Accounts

  

  

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Prepare a schedule of interest expense and bond amortization for 2020–2022. (Round answer to 0 decimal places, e.g. 38,548.)

Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method
Date		Cash Paid		Interest Expense		Premium Amortized		Carrying Amount of Bonds
1/1/20		$		$		$		$
12/31/20
12/31/21
12/31/22

eTextbook and Media

List of Accounts

  

  

Partially correct answer iconYour answer is partially correct.

Prepare the journal entry to record the interest payment and the amortization for 2020. (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.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020

Answer 1

Date	Account Titles and Explanation	Debit	Credit
January 1, 2020	Cash	591,698
	Bonds Payable		550,000
	Premium on bonds payable		41,698
	(To record issuance of bonds)
Schedule of Interest Expense and Bond Premium Amortization
Effective-Interest Method
	Cash	Interest	Premium	Carrying
Date	Paid	Expense	Amortized	Amount of Bonds
01/01/20				591,698
12/31/20	66000	59,170	6,830	584,868
12/31/21	66000	58,487	7,513	577,355
12/31/22	66000	57,735	8,265	569,090
Date	Account Titles and Explanation	Debit	Credit
December 31, 2020	Interest Expense	59,170
	Premium on Bonds Payable	6,830
	Cash		66,000
	(To record interest Expense)