ROBLEM6 (8 points): Lexis Co. issued $800,000, 996, 10-year bonds on January 1,
ID: 2436477 • Letter: R
Question
ROBLEM6 (8 points): Lexis Co. issued $800,000, 996, 10-year bonds on January 1, 2017, at 105. Interest is payable nnually on January 1. The company uses the straight-line method of amortization for bond premium or discount. Prepare e jounal entries to record the following: Note: Write clearly and use complete account names [do not abbreviate]. (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2017 (c) The payment of interest on January 1, 2018. (d) On January 1,2019, when the carrying value of the bonds was $832,000, the company redeemed the bonds at 106. Record the redemption of bonds assuming interest for the period has been paid and recorded. General Journal J1 Date Account Titles and Explanation Ref Debit CreditExplanation / Answer
No Date Account Titles and Explanation Debit Credit a Jan 1, 2017 Cash $ 840,000 (800000 x 105%) Premium on bonds payable $ 40,000 Bonds payable $ 800,000 b Dec 31, 2017 Interest Expense $ 68,000 Difference Premium on bonds payable $ 4,000 (40000÷ 10 Years) Interest Payable $ 72,000 (800000 x 9%) c Jan 1, 2018 Interest Payable $ 72,000 Cash $ 72,000 d Jan 1, 2019 Bonds payable $ 800,000 Given Premium on bonds payable $ 32,000 (40000-2x 4000) Loss on redemption of bonds payable $ 16,000 Difference Cash $ 848,000 (800000 x 106%)
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