Presented below are selected transactions on the books of Nash Corporation. Prep

Question

Presented below are selected transactions on the books of Nash Corporation.

Prepare journal entries for the transactions above. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

May 1, 2017 Bonds payable with a par value of $936,000, which are dated January 1, 2017, are sold at 105 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2027. (Use interest expense account for accrued interest.) Dec. 31 Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line amortization.) Jan. 1, 2018 Interest on the bonds is paid. April 1 Bonds with par value of $374,400 are called at 101 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.) Dec. 31 Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.

Explanation / Answer

Journal entries Date Account Titles Debit Credit May.1,2017 Cash $1,020,240.00 Interest Expense $37,440.00 Premium on Bonds Payable $46,800.00 Bonds Payable $936,000.00 Dec.31,2017 Interest Expense $112,320.00 Premium on Bonds Payable $4,680.00 Interest Payable $117,000.00 Jan.1,2018 Interest Payable $117,000.00 Cash $117,000.00 April.1,2018 Bonds Payable $374,400.00 Premium on Bonds Payable $16,848.00 Interest Expense $11,232.00 Cash $389,376.00 Profit on redemption of Bonds Payable $13,104.00 Dec.31,2018 Interest Expense $67,392.00 Premium on Bonds Payable $2,808.00 Interest Payable $70,200.00

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