Question

On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907, 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. Aumont Company allocates interest and unamortized discount or premium on the effective-interest basis. 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.)

a.Prepare the journal entry at the date of the bond issuance

b.Prepare a schedule of interest expense and bond amortization for 2020–2022.

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

d.Prepare the journal entry to record the interest payment and the amortization for 2022.

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

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

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

Prepare the journal entry to record the interest payment and the amortization for 2022. (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, 2022

Answer 1

Date	Account Title	Debit	Credit
01-Jan-20	Cash	537,907
	Bond Payable		500,000
	Premium on Bond Payable		37,907
	(Being recorded issue of bond at premium)
		Semi Annual-Inetrest Period End	Interest to be paid	Interest Expenses	Premium Amortizattion	Un Amortized Premium	Bond Carrying Value
		A	B	C	D=B-C	E	F
		01-Jan-20				37907	537907
		31-Dec-20	60,000	53791	6,209	31,698	531,698
			(500000 X12%)	(537907 X 10%)		(37904-6209)
		31-Dec-21	60,000	53170	6,830	24,867	524,867
			(500000 X12%)	(531698X 10%)		(31698-6830)
		31-Dec-22	60,000	52487	7,513	17,354	517,354
			(500000 X12%)	(524867 X 10%)		(24867-7513)
Date	Account Title	Debit	Credit
31-Dec-20	Interest Expenses	53,791
	Premium on Bond Payable	6,209
	Cash		60,000
	(Record of annual interest payment
	and premium amortization)
Date	Account Title	Debit	Credit
31-Dec-22	Interest Expenses	52,487
	Premium on Bond Payable	7,513
	Cash		60,000
	(Record of annual interest payment
	and premium amortization)