On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, wi
ID: 2464680 • Letter: O
Question
On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year.
Assuming the market interest rate on the issue date is 5%, the bonds will issue at $663,527.
A) Complete the first three rows of an amortization table
1/1/15 - Cash Paid - Interest Expense - Decrease in Carrying Value - Carrying Value
12/31/15 - Cash Paid - Interest Expense - Decrease in Carrying Value - Carrying Value
12/31/16 - Cash Paid - Interest Expense - Decrease in Carrying Value - Carrying Value
B)
Record the bond issue on January 1, 2015, and the first two interest payments on December 31, 2015, and December 31, 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)
1/1/2015 On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year. Assuming the market interest rate on the issue date is 5%, the bonds will issue at $663,527. Record the issuance of the bond.
12/31/2015 On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year. Assuming the market interest rate on the issue date is 5%, the bonds will issue at $663,527. Record the first semiannual interest payment.
12/31/2016 On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year. Assuming the market interest rate on the issue date is 5%, the bonds will issue at $663,527. Record the second semiannual interest payment.
On January 1, 2015, White Water issues $590,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year.
Explanation / Answer
a) Amortization of premium:
b) Journal Entries:
01/-01/15 Debit Cash $663527
Credit Bonds Payable $590000
Credit Premium on Bonds Payable $73527
12/31/15 Debit Interest on Bonds $33176
credit Premium on Bonds Payable $2224
Credit Cash $35400
12/31/16 Debit Interest on Bonds $33065
credit Premium on Bonds Payable $2335
Credit Cash $35400
Period Cash interest Interest Expense Premium amortized Carrying amount$ 1/1/15 663527 12/31/15 35400 33176 2224 661303 12/31/16 35400 33065 2335 658968Related Questions
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