. Dechow, Inc., issued $250,000 of 8%, 15-year bonds at 97 on July 1, 2009. Interest is payable semiannually on December 31 and June 30. Through June 30, 2016, Dechow amortized $3,186 of the bond discount. On July 1, 2016 Dechow retired the bonds at 101. Required a. Prepare journal entries to record the issue and retirement of these bonds. (Assume the June interest expense has already been recorded.) b. Post the journal entries from part a to their respective T-accounts. c. Record each of the transactions from part a in the financial statement effects template.

Question
Asked Nov 27, 2019
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. Dechow, Inc., issued $250,000 of 8%, 15-year bonds at 97 on July 1, 2009. Interest is payable semiannually on December 31 and June 30. Through June 30, 2016, Dechow amortized $3,186 of the bond discount. On July 1, 2016 Dechow retired the bonds at 101. Required a. Prepare journal entries to record the issue and retirement of these bonds. (Assume the June interest expense has already been recorded.) b. Post the journal entries from part a to their respective T-accounts. c. Record each of the transactions from part a in the financial statement effects template.

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Expert Answer

Step 1

a.

Prepare journal entry to record issuance of bonds payable and the retirement of the bonds.

Account titles and Explanation
Date
Debit
Credit
July 1
Cash ($250,000 x 96%)
Discount on bonds payable
($250,000-$240,000)
Bonds payable
(To record issuance of bonds payable at
discount)
$240,000
2009
$10,000
$250,000
Date
Account titles and Explanation
Debit
Credit
Bonds payable
July 1, 2016
$250,000
Loss on Bond retirement
($252,500 $6,814- $250,000)
Discount on bonds payable
($10,000-S3,186)
Cash ($250,000 x 101%)
(To record retirement of bonds)
$9,314
$6,814
$252,500
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Account titles and Explanation Date Debit Credit July 1 Cash ($250,000 x 96%) Discount on bonds payable ($250,000-$240,000) Bonds payable (To record issuance of bonds payable at discount) $240,000 2009 $10,000 $250,000 Date Account titles and Explanation Debit Credit Bonds payable July 1, 2016 $250,000 Loss on Bond retirement ($252,500 $6,814- $250,000) Discount on bonds payable ($10,000-S3,186) Cash ($250,000 x 101%) (To record retirement of bonds) $9,314 $6,814 $252,500

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Step 2

b.

Post the journal entries from part a t...

Cash
240,000 July 1,2016
July 1, 2009
252,500
Bonds Payable
250,000 July 1,2009
July 1, 2016
250,000
Discount on Bonds Payable
10,000 July 1,2016
July 1, 2009
6,814
Loss on retirement of bonds
July 1, 2016
9,314
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Cash 240,000 July 1,2016 July 1, 2009 252,500 Bonds Payable 250,000 July 1,2009 July 1, 2016 250,000 Discount on Bonds Payable 10,000 July 1,2016 July 1, 2009 6,814 Loss on retirement of bonds July 1, 2016 9,314

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