On January 1, 2017, Ashlock Chemical issued RM4,000,000, 10%, 10-year bonds at RM4,543,627. This price resulted in an 8% effective interest rate on the bonds. Ashlock uses the effective-interest method to amortize bond premium or discount. The bond pays annual interest on each January 1. Instructions (a) Prepare the journal entries to record the following transactions 1. The issuance of the bonds on January 1, 2017 2. Accrual of interest and amortization of the premium on December 31, 2017 3. The payment of interest on January 1, 2018. 4. Accrual of interest and amortization of the premium on December 31, 2018 (b) Show the proper non-current liability statement of financial position presentation for the bond liability at December 31, 2018.
On January 1, 2017, Ashlock Chemical issued RM4,000,000, 10%, 10-year bonds at RM4,543,627. This price resulted in an 8% effective interest rate on the bonds. Ashlock uses the effective-interest method to amortize bond premium or discount. The bond pays annual interest on each January 1. Instructions (a) Prepare the journal entries to record the following transactions 1. The issuance of the bonds on January 1, 2017 2. Accrual of interest and amortization of the premium on December 31, 2017 3. The payment of interest on January 1, 2018. 4. Accrual of interest and amortization of the premium on December 31, 2018 (b) Show the proper non-current liability statement of financial position presentation for the bond liability at December 31, 2018.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT