On March 1, 2020, Mitchell Inc. issued 60, 6%, $1,000 bonds dated March 1, 2020 for $62,626. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 5%. The bonds mature February 28, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. The partial amortization schedule is as follows: Amortization Schedule Cash Effective Premium Outstanding Interest Interest amortization Balance 03/01/20 $62,626 1 08/31/20 $1,800 $1,566 ($234) 62,391 02/28/21 1,800 1,560 (240) 62,151 Required: Prepare journal entries on the following dates. Round to the nearest dollar. 1. March 1, 2020, bond issuance. 2. August 31, 2020, interest payment. 3. December 31, 2020, adjusting entry. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Insert Format Table

On March 1, 2020, Mitchell Inc. issued 60, 6%, $1,000 bonds dated March 1, 2020 for $62,626. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 5%. The bonds mature February 28, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. The partial amortization schedule is as follows: Amortization Schedule Cash Effective Premium Outstanding Interest Interest amortization Balance 03/01/20 $62,626 1 08/31/20 $1,800 $1,566 ($234) 62,391 02/28/21 1,800 1,560 (240) 62,151 Required: Prepare journal entries on the following dates. Round to the nearest dollar. 1. March 1, 2020, bond issuance. 2. August 31, 2020, interest payment. 3. December 31, 2020, adjusting entry. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Insert Format Table

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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