Post the following journal entry: On 7/1/14, ABC sold 12% bonds having a maturity value of...

Post the following journal entry: On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective yield of 10%. The bonds are
dated 7/1/14, and mature 7/1/19. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of
amortization for bond premium or discount. Record the adjusting entry for the accrual of interest and the related amortization on 12/31/14.
Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense.

Expert Solution

All working forms part of the answer
Answer: Journal entry on 31 Dec 2014

Date	Accounts title	Debit	Credit
31-Dec-14	Interest Expense	$ 43,088.55
	Premium on Bonds Payable	$ 4,911.45
	Interest Payable		$ 48,000.00
	(6 months semi annual Interest accrued)

Working for above: Partial Amortisation schedule

Period	Cash Interest	Interest Expense	Premium Amortised	Unamortised Premium	Carrying Value
01-Jul-14				$ 61,771.00	$ 861,771.00
01-Jan-15	$ 48,000.00 [800000x12%x6/12]	$ 43,088.55 [861771 x 10% x 6/12]	$ 4,911.45 [48000 – 43088.55]	$ 56,859.55 [61771 – 4911.45]	$ 856,859.55 [861771 – 4911.45]

ekkarill92 answered 1 year ago

10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting...

10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective yield of 10%. The bonds are dated 7/1/14, and mature 7/1/19. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of amortization for bond premium or discount. Record the adjusting entry for the accrual of interest and the related amortization on 12/31/14. Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense....

On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for...

On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for $761,190, which provides the bondholders with a 12% yield. The bonds are dated January 1, 2020, and mature on January 1, 2025, with interest payable on January 1 of each year. The company follows IFRS and uses the effective interest method. Prepare the journal entry at the date of issue. (Round answers to 0 decimal places, e.g. 5,255. Credit account titles are automatically indented...

On January 1, 2020, Grouper Company sold 12% bonds having a maturity value of $550,000 for...

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. Correct answer iconYour answer is correct. Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal...

On January 1, 2020, Bonita Company sold 12% bonds having a maturity value of $650,000 for...

On January 1, 2020, Bonita Company sold 12% bonds having a maturity value of $650,000 for $699,280, 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. Bonita Company allocates interest and unamortized discount or premium on the effective-interest basis. 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...

On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for...

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...

On January 1, 2020, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for...

On January 1, 2020, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for $1,075,815, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020 and they mature on January 1, 2025, with semiannual interest payable on July 1 and January 1 each year. The company uses the effective-interest method. Instructions: a) Prepare a complete amortization schedule for these bonds in good form. b) Prepare the journal entry needed to record the issuance...

Exercise 14-7 Indigo Company sells 8% bonds having a maturity value of $1,700,000 for $1,511,507. The...

Exercise 14-7 Indigo Company sells 8% bonds having a maturity value of $1,700,000 for $1,511,507. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. a.Determine the effective-interest rate. b.Set up a schedule of interest expense and discount amortization under the effective-interest method.

Bonds with a face value of $1,000,000 are sold at 98. What is the journal entry...

Bonds with a face value of $1,000,000 are sold at 98. What is the journal entry to record the sale of the bonds? Cash 1,000,000 Gain on Sale of Bonds 20,000 Bonds Payable 980,000 Cash 980,000 Loss on Sale of Bonds 20,000 Bonds Payable 1,000,000 Cash 980,000 Bonds Payable 980,000 Cash 1,000,000 Bonds Payable 1,000,000 A corporation has Bonds Payable with a face value of $1,000,000 and an amortized cost ( carrying value ) of...

What is the journal entry to retire bonds at maturity?

Post adjusting Journal Entries 9 On 12/31/14, ABC issued 5,000 shares of $3 par value common...

Post adjusting Journal Entries 9 On 12/31/14, ABC issued 5,000 shares of $3 par value common stock at the closing market price of $7 per share. Prepare ABC's journal entry to reflect the issuance of the stock on 12/31/14. 10 On 7/1/14, ABC sold 12% bonds having a maturity value of $800,000 for $861,771, resulting in an effective yield of 10%. The bonds are dated 7/1/14, and mature 7/1/19. Interest is payable semiannually on July 1 and January 1. ABC...

Question