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Entries for Bonds Payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: 20Y1   July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y2   June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y3   June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.)   Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar. 20Y1 July 1 1. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 2. Accounts Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable Dec. 31 1. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 2. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 20Y2 June 30 Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Cash Discount on Bonds Payable Interest Expense Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Cash Discount on Bonds Payable Interest Expense Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 20Y3 June 30   1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Accounts Payable Cash Interest Expense Interest Payable Notes Payable 3. Bonds Payable Discount on Bonds Payable Gain on Redemption of Bonds Interest Receivable Interest Expense Loss on Redemption of Bonds Premium on Bonds Payable 4. Cash Interest Expense Interest Payable Interest Receivable Loss on Redemption of Bonds Premium on Bonds Payable Part 2  Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. a.  20Y1   b.  20Y2   Part 3  Determine the carrying amountof the bonds as of December 31, 20Y2.

Entries for Bonds Payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: 20Y1   July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y2   June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Y3   June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.)   Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar. 20Y1 July 1 1. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 2. Accounts Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable Dec. 31 1. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 2. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable 20Y2 June 30 Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Cash Discount on Bonds Payable Interest Expense Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Cash Discount on Bonds Payable Interest Expense Notes Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 20Y3 June 30   1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Accounts Payable Cash Interest Expense Interest Payable Notes Payable 3. Bonds Payable Discount on Bonds Payable Gain on Redemption of Bonds Interest Receivable Interest Expense Loss on Redemption of Bonds Premium on Bonds Payable 4. Cash Interest Expense Interest Payable Interest Receivable Loss on Redemption of Bonds Premium on Bonds Payable Part 2  Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. a.  20Y1   b.  20Y2   Part 3  Determine the carrying amountof the bonds as of December 31, 20Y2.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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Entries for Bonds Payable, including bond redemption

The following transactions were completed by Montague Inc., whose fiscal year is the calendar year:

20Y1

 

July 1.

Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30.

Dec. 31.

Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment.

20Y2

 

June 30.

Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment.

Dec. 31.

Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment.

20Y3

 

June 30.

Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.)

 

  1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar.

20Y1 July 1

1.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Revenue
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

Dec. 31

1.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable

2.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable

20Y2 June 30


  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

2.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Notes Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

Dec. 31

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

2.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Notes Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

20Y3 June 30

  

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

2.

  • Accounts Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable

3.

  • Bonds Payable
  • Discount on Bonds Payable
  • Gain on Redemption of Bonds
  • Interest Receivable
  • Interest Expense
  • Loss on Redemption of Bonds
  • Premium on Bonds Payable

4.

  • Cash
  • Interest Expense
  • Interest Payable
  • Interest Receivable
  • Loss on Redemption of Bonds
  • Premium on Bonds Payable

Part 2

  •  Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2.

a.  20Y1

  

b.  20Y2

  

Part 3

  •  Determine the carrying amountof the bonds as of December 31, 20Y2.
       
Entries for Bonds Payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: 20Y1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest раyment. 20Y2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest раyment. 20Υ3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.) 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the neare st dollar. 20Y1 July 1 Dec. 31 Premium on Bonds Payable 20Y2 June 30 Notes Payable Dec. 31 20Y3 June 30
Transcribed Image Text:Entries for Bonds Payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: 20Y1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 20Y1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest раyment. 20Y2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest раyment. 20Υ3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.) 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the neare st dollar. 20Y1 July 1 Dec. 31 Premium on Bonds Payable 20Y2 June 30 Notes Payable Dec. 31 20Y3 June 30
20Y2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Υ3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.) 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar. 20Y1 July 1 Dec. 31 Premium on Bonds Payable 20Y2 June 30 Notes Payable Dec. 31 20Y3 June 30 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. a. 20Y1 b. 20Y2 3. Determine the carrying amount of the bonds as of December 31, 20Y2. III III III II00
Transcribed Image Text:20Y2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. 20Υ3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.) 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. When required, round amounts to the nearest dollar. 20Y1 July 1 Dec. 31 Premium on Bonds Payable 20Y2 June 30 Notes Payable Dec. 31 20Y3 June 30 2. Indicate the amount of the interest expense in (a) 20Y1 and (b) 20Y2. a. 20Y1 b. 20Y2 3. Determine the carrying amount of the bonds as of December 31, 20Y2. III III III II00
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