Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 8%. On October 1, 2018, Ivanhoe buys back $118,800 worth of bonds for $125,800 (includes accrued interest). Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.) Schedule of Bond Discount AmortizationEffective-Interest MethodBonds Sold to Yield Date CashPaid InterestExpense DiscountAmortizedCarryingAmount ofBonds6/1/17 $$$$12/1/17   6/1/18   12/1/18   6/1/19   12/1/19   6/1/20   12/1/20   6/1/21   * Difference due to rounding Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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.) DateAccount Titles and ExplanationDebitCredit6/1/17         12/1/17         12/31/17         6/1/18           10/1/18         (To record interest expense and premium amortization)10/1/18           (To record buy back of bonds)12/1/18         12/31/18         6/1/19           12/1/19

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 5P: Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and...
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Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 8%. On October 1, 2018, Ivanhoe buys back $118,800 worth of bonds for $125,800 (includes accrued interest).

Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.)

Schedule of Bond Discount Amortization
Effective-Interest Method
Bonds Sold to Yield


Date

Cash
Paid

Interest
Expense

Discount
Amortized
Carrying
Amount of
Bonds
6/1/17 $
$
$
$
12/1/17

 

6/1/18

 

12/1/18

 

6/1/19

 

12/1/19

 

6/1/20

 

12/1/20

 

6/1/21

 


* Difference due to rounding

Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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
6/1/17

 

 

 

 

12/1/17

 

 

 

 

12/31/17

 

 

 

 

6/1/18

 

 

 

 

 


10/1/18

 

 

 

 

(To record interest expense and premium amortization)
10/1/18

 

 

 

 

 


(To record buy back of bonds)
12/1/18

 

 

 

 

12/31/18

 

 

 

 

6/1/19

 

 

 

 

 


12/1/19

 

 

 

 

 

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