»oooo Verizon 4:47 PM 41% edugen.wileyplus.com Exercise 10-23 Gomez Company issu

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»oooo Verizon 4:47 PM 41% edugen.wileyplus.com Exercise 10-23 Gomez Company issued $352,000, 796, 11-year bonds on January 1, 2014, for $410,477. This price resulted in an effective-interest rate of 5% on the bonds Interest is payable annually on January 1. Gomez uses the effective-interest method to amortize bond premium or discount. Prepare the schedule using effective-interest method to amortize bond premium or discount of Gomez Company. (Round answers to 0 decimal places, e.g. 125.) mortize Premiu eres Interest t Interest Expense Premium Be Recorded ortization Issue date SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SKILL-BUILDING Prepare the journal entries to record the issuance of the bonds. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2014 SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SKILL-BUILDING Prepare the journal entries to record the accrual of interest and the premium amortization on December 31, 2014. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2014 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT VIDEO: SKILL-BUILDING Prepare the journal entries to record the payment of interest on January 1, 2015 Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Jan. 1, 2015 SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SKILL-BUILDING

Explanation / Answer

b)

Interest period Interest to be paid Interest expense to be recorded premium amortization Unamortized premium Bond carrying value Issue date 58477 410477 1 24640   [352000*.07] 20523.85   [410477*.05] 4116.15 [24640-20523.85] 54360.85   [58477-4116.15] 406360.85   [352000+54360.85] 2 24640 20318.04   [406360.85*.05] 4321.96    [24640-20318.04] 50038.89 [54360.85-4321.96] 402038.89   [352000+50038.89]

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