The following information is taken from Bramble Corp.\'s balance sheet at Decemb
ID: 2414231 • Letter: T
Question
The following information is taken from Bramble Corp.'s balance sheet at December 31, 2016. Current liabilities Interest payable Long-term liabilities 87,000 Bonds payable (496, due January 1, 2027) $2,880,000 Less: Discount on bonds payable 28,800 2,851,200 Interest is payable annually on January 1. The bonds are callable on any annual interest date. Bramble uses straight-line amortization for any bond premium or discount. From December 31, 2016, the bonds will be outstanding for an additional 10 years (120 months). (a) Journalize the payment of bond interest on January 1, 2017. (b) Prepare the entry to amortize bond discount and to accrue the interest on December 31, 2017. (c) Assume on January 1, 2018, after paying interest, that Bramble Corp. calls bonds having a face value of $480,000. The call price is 102. Record the redemption of the bonds (d) Prepare the adjusting entry at December 31, 2018, to amortize bond discount and to accrue interest on the remaining bonds.Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Jan 1,2017 Interest payable 87000 Cash 87000 (To record interest paid) Dec 31,2017 Interest expense 118080 Discount on bonds payable 2880 Interest payable (2880000*4%) 115200 (To record accured interest) Jan 1,2018 Bonds payable 480000 Loss on bond redemption 13920 Cash 489600 Discount on bonds payable 4320 (TO record bond redemption) Dec 31,2018 Interest expense 98400 Discount on bonds payable (21600/9) 2400 Interest payable (2400000*4%) 96000 (To record interest)Related Questions
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