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Exercise 9-75 Using a Discount Amortization Table {Straight Line) Panamint Candy Company prepared the following amortization table for $300,000 of 5-year, 9% bonds issued and sold by Panamint on January 1, 2021, for $285,000: Period Cash Payment (Credit) Interest Expense (Debit) Discount on Hands Payable (Credit) Discount on Bonds Payable Balance Carrying Value At issue $ 15,000 $285,000 06/30/21 $13,500 $15,000 51,500 13,500 286,500 12/31/21 13,500 15,000 1,500 12,000 288,000 06/30/22 13,500 15,000 1,500 10,500 289,500 12/31/22 13.500 15,000 1,500 9,000 291,000 06/30/23 13,500 15,000 1,500 7,500 292,500 12/31/23 13,500 15,000 1,500 6,000 294,000 06/30/24 ! 3,500 15,000 1,500 4,500 295,500 12/31/24 13,500 15,000 1,500 3,000 297,000 0(5/30/25 13,500 15,000 1,500 1,500 298,500 12/31/25 13,500 15,000 1,500 0 300,000 Required: Prepare the entry to recognize the sale of the bonds on January 1, 2021. Prepare the entry to recognize the first interest payment on June 30, 2021, Determine the interest expense for these bonds that Panamint will report on its 2023 income statement. Indicate how these bonds will appear in Panamint’s December 31, 2024 balance sheet.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 9, Problem 75E
Textbook Problem

Exercise 9-75 Using a Discount Amortization Table {Straight Line)

Panamint Candy Company prepared the following amortization table for $300,000 of 5-year, 9% bonds issued and sold by Panamint on January 1, 2021, for $285,000:

Period

Cash

Payment

(Credit)

Interest

Expense

(Debit)

Discount on Hands Payable (Credit)

Discount on Bonds Payable Balance

Carrying

Value

At issue

$ 15,000

$285,000

06/30/21

$13,500

$15,000

51,500

13,500

286,500

12/31/21

13,500

15,000

1,500

12,000

288,000

06/30/22

13,500

15,000

1,500

10,500

289,500

12/31/22

13.500

15,000

1,500

9,000

291,000

06/30/23

13,500

15,000

1,500

7,500

292,500

12/31/23

13,500

15,000

1,500

6,000

294,000

06/30/24

! 3,500

15,000

1,500

4,500

295,500

12/31/24

13,500

15,000

1,500

3,000

297,000

0(5/30/25

13,500

15,000

1,500

1,500

298,500

12/31/25

13,500

15,000

1,500

0

300,000

Required:

  1. Prepare the entry to recognize the sale of the bonds on January 1, 2021.
  2. Prepare the entry to recognize the first interest payment on June 30, 2021,
  3. Determine the interest expense for these bonds that Panamint will report on its 2023 income statement.
  4. Indicate how these bonds will appear in Panamint’s December 31, 2024 balance sheet.

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Chapter 9 Solutions

Cornerstones of Financial Accounting
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