Question

Golf World, Inc., issued $240,000 of 6%, 15-year bonds dated January 1, 2018 that will pay interest semiannually on June 30 and December 31. These bonds were issued at

$198,494, and the market rate of interest was 8% at the issue date.

need answer for below 4 and 5:

4.   Golf World decided to retire the bonds early on January 1, 2023, at 105. Prepare the necessary journal entries to record this early retirement.

5.   Prove your numbers provided in the problem are correct by showing the table values you would have used to calculate this manually. This is how you will “show your work,” proving the Excel formulas were used correctly.

Answer 1

5	Bonds Amortization table
Date	Interest payment @ 6%	Interest expense @8%	Amortization of Bond Discount	Debit balance in Bond Discount Account	Credit balance in Bonds payable Account	BooK value of Bonds
1/1/2018				$41,506	$240,000	$198,494
6/30/2018	$7,200	$7,940	$740	$40,766	$240,000	$199,234
12/31/2018	$7,200	$7,969	$769	$39,997	$240,000	$200,003
6/30/2019	$7,200	$8,000	$800	$39,197	$240,000	$200,803
12/31/2019	$7,200	$8,032	$832	$38,365	$240,000	$201,635
6/30/2020	$7,200	$8,065	$865	$37,499	$240,000	$202,501
12/31/2020	$7,200	$8,100	$900	$36,599	$240,000	$203,401
6/30/2021	$7,200	$8,136	$936	$35,663	$240,000	$204,337
12/31/2021	$7,200	$8,173	$973	$34,690	$240,000	$205,310
6/30/2022	$7,200	$8,212	$1,012	$33,677	$240,000	$206,323
12/31/2022	$7,200	$8,253	$1,053	$32,624	$240,000	$207,376
6/30/2023	$7,200	$8,295	$1,095	$31,529	$240,000	$208,471
12/31/2023	$7,200	$8,339	$1,139	$30,391	$240,000	$209,609
6/30/2024	$7,200	$8,384	$1,184	$29,206	$240,000	$210,794
12/31/2024	$7,200	$8,432	$1,232	$27,974	$240,000	$212,026
6/30/2025	$7,200	$8,481	$1,281	$26,693	$240,000	$213,307
12/31/2025	$7,200	$8,532	$1,332	$25,361	$240,000	$214,639
6/30/2026	$7,200	$8,586	$1,386	$23,976	$240,000	$216,024
12/31/2026	$7,200	$8,641	$1,441	$22,535	$240,000	$217,465
6/30/2027	$7,200	$8,699	$1,499	$21,036	$240,000	$218,964
12/31/2027	$7,200	$8,759	$1,559	$19,477	$240,000	$220,523
6/30/2028	$7,200	$8,821	$1,621	$17,856	$240,000	$222,144
12/31/2028	$7,200	$8,886	$1,686	$16,171	$240,000	$223,829
6/30/2029	$7,200	$8,953	$1,753	$14,418	$240,000	$225,582
12/31/2029	$7,200	$9,023	$1,823	$12,594	$240,000	$227,406
6/30/2030	$7,200	$9,096	$1,896	$10,698	$240,000	$229,302
12/31/2030	$7,200	$9,172	$1,972	$8,726	$240,000	$231,274
6/30/2031	$7,200	$9,251	$2,051	$6,675	$240,000	$233,325
12/31/2031	$7,200	$9,333	$2,133	$4,542	$240,000	$235,458
6/30/2032	$7,200	$9,418	$2,218	$2,324	$240,000	$237,676
12/31/2032	$7,200	$9,507	$2,324	($0)	$240,000	$240,000
4	Journal entry for early retirement
	Bonds payable (Face Value)	$240,000
	Loss on retirement of bond (balancing figure)	$44,624
	Discount on bonds payable		$32,624
	Cash (2400 x $105)		$252,000