Journalize the following: Nectarine issued $400,000 face amount of 12% bonds pay
ID: 2444507 • Letter: J
Question
Journalize the following:
Nectarine issued $400,000 face amount of 12% bonds payable on January 1, 2017 at 104. The bonds were dated January 1, 2017, pay interest on each January 1, and mature in five years.
Nectarine accrued interest on the bonds described above on December 31, 2017. The premium on the bonds is amortized using the straight-line method.
Nectarine redeemed the above bonds at book value when the book value was $409,600.
Nectarine issued $200,000 face amount of six-year, 10% bonds payable on January 1, 2017, at 94. Interest is payable annually on January 1. Record the accrual of interest on these bonds at December 31, 2017 using the straight-line method of amortization.
Explanation / Answer
Answer:
Cash A/C Dr. $416000 *(400000*104%)
To Bonds Payable A/C $400000
To Premium on bonds payable A/C $16000
Interest expenses A/C Dr. $44800
Premium on bonds payable A/C Dr. $3200 (16000/5)
To cash A/C $48000 (400000*12%)
Bonds Payable A/C Dr. $400000
Profit on redemption of bond A/C Dr. $9600
To cash A/C $409600
Cash A/C Dr. $188000 *(200000*94%)
Discount on bonds payable A/C Dr. $12000
To Bonds Payable A/C $200000
Interest expenses A/C Dr. $22000
To Discount on bonds payable A/C $2000 (12000/6)
To cash A/C $20000 (200000*10%)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.