Brief Exercise 14-9 On January 1, 2017, Pharoah Corporation redeemed $620,000 of

ID: 2407718 • Letter: B

Question

Brief Exercise 14-9 On January 1, 2017, Pharoah Corporation redeemed $620,000 of bonds at 97. At the time of redemption, the unamortized premium was $18,600. Prepare the corporation's journal entry to record the reacquisition of the bonds. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 8 decimal places, e.g. 1.251247 and final answer to O decimal places, e.g. 38,548.) Account Titles and Explanation Debit Credit LINK TO TEXT

Explanation / Answer

EXERCISE 14-9

Journal Entry to record the Reacquisition of the Bonds

Date

Account Titles and Explanation

Debit ($)

Credit ($)

January 1, 2017

Bonds Payable A/c

620,000

Premium on Bonds Payable A/c

18,600

To Gain on Redemption of Bonds A/c

37,200

To Cash A/c [ $620,000 x 0.97 ]

601,400

EXERCISE 11-6

(e)Double Declining Balance Method for 2018

Depreciation = Beginning Balance x 2 x Straight Line Depreciation Rate

Straight Line Depreciation Rate = 1 / Useful Life = 1 / 8 = 0.125

Depreciation 2017 = $221,000 x 2 x 0.25 x 3/12 = $13,812.50

Depreciation 2018 = [ $221,000 – 13,812.50 ] x 2 x 0.125 = $51,797

Hence, Depreciation under Double Declining Balance Method for 2018 = $51,797