You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s journal entries, shown as follows: Journal Entries, Year 1 Journal Date Description Debit Credit Jan. 1 Cash 1,004,720 Premium on Bonds Payable 58,720 Bonds Payable 946,000 Jun. 30 Interest Expense 18,349 Premium on Bonds Payable 2,936 Cash 21,285 Jul. 1 Cash 1,921,280 Discount on Bonds Payable 78,720 Bonds Payable 2,000,000 Dec. 31 Interest Expense 18,349 Premium on Bonds Payable 2,936 Cash 21,285 31 Interest Expense 41,560 Discount on Bonds Payable 6,560 Cash 35,000 31 Retained Earnings 78,258 Interest Expense 78,258 Bonds Payable Review the journal entries on the SpringFit Corporation panel, then answer the following questions. 1. Assuming that no bonds had been issued prior to Year 1, how many different bonds appear in the journal entries for this year? 2. Which entry shows bonds issued at a contract rate lower than the market rate of interest? Choose the date. July 1 3. How much interest was paid during the year on the bonds in question (2)? $
You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s
Journal Entries, Year 1
| Journal | |||
| Date | Description | Debit | Credit |
| Jan. 1 | Cash | 1,004,720 | |
| Premium on Bonds Payable | 58,720 | ||
| Bonds Payable | 946,000 | ||
| Jun. 30 | Interest Expense | 18,349 | |
| Premium on Bonds Payable | 2,936 | ||
| Cash | 21,285 | ||
| Jul. 1 | Cash | 1,921,280 | |
| Discount on Bonds Payable | 78,720 | ||
| Bonds Payable | 2,000,000 | ||
| Dec. 31 | Interest Expense | 18,349 | |
| Premium on Bonds Payable | 2,936 | ||
| Cash | 21,285 | ||
| 31 | Interest Expense | 41,560 | |
| Discount on Bonds Payable | 6,560 | ||
| Cash | 35,000 | ||
| 31 | 78,258 | ||
| Interest Expense | 78,258 |
Bonds Payable
Review the journal entries on the SpringFit Corporation panel, then answer the following questions.
1. Assuming that no bonds had been issued prior to Year 1, how many different bonds appear in the journal entries for this year?
2. Which entry shows bonds issued at a contract rate lower than the market rate of interest? Choose the date.
July 1
3. How much interest was paid during the year on the bonds in question (2)?
$
4. What is the carrying amount of the bonds in question (2) at the end of the year?
$
5. Which entry shows bonds that sold for more than their face amount? Choose the date.
Jan. 16. How much interest was paid during the year on the bonds in question (5)?
$
7. Assuming that straight-line amortization is used for the bonds in question (5), what is the bond life?
10 years
8. What is the carrying
$
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