Polk Incorporated issued $242,000 of 7% bonds on July 1, 2019, for $251,421.19. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 6%. Polk uses the effective interest method of amortization. Required: Prepare the journal entries to record the issue of the bonds on July 1, 2019, and the interest payments on December 31, 2019, and June 30, 2020. In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2020.
Polk Incorporated issued $242,000 of 7% bonds on July 1, 2019, for $251,421.19. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 6%. Polk uses the effective interest method of amortization. Required: Prepare the journal entries to record the issue of the bonds on July 1, 2019, and the interest payments on December 31, 2019, and June 30, 2020. In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2020.
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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Polk Incorporated issued $242,000 of 7% bonds on July 1, 2019, for $251,421.19. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 6%. Polk uses the effective interest method of amortization.
Required:
Prepare the |
Prepare a bond interest expense and discount amortization schedule for the bonds through June 30, 2020.
POLK INCORPORATED | ||||
Bond Interest Expense and Discount Amortization Schedule (Partial) | ||||
Effective Interest Method 7% Bonds Sold to Yield 6% | ||||
Date | Cash Credit | Interest Expense Debit | Unamortized Discount Credit | Book |
07/01/19 |
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12/31/19 |
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06/30/20 |
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Expert Solution
Step 1
Journal entries to record the issue of the bonds on July 1, 2019, and the interest payments on December 31, 2019, and June 30, 2020
Journal Entry |
|||
2019 |
Particulars |
Amt (Dr) | Amt (Cr) |
01-Jul |
Cash Dr |
251421.19 | |
To Premium on Bonds payable |
9421.19 | ||
To Bonds Payable |
242000 | ||
31-Dec |
Interest expense |
7542.64 | |
Premium on Bonds Payable |
927.36 | ||
To Interest payable |
8470 | ||
2020 | |||
30-Jun |
Interest expense |
7514.81 | |
Premium on Bonds Payable |
955.19 | ||
Interest payable |
8470 |
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