You are an accounting intern working for SpringFit Corporation. You have recentl
ID: 2529385 • Letter: Y
Question
You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s journal entries, shown as follows:
Journal Entries, Year 1
PAGE 15
GENERAL JOURNAL
ACCOUNTING EQUATION
1
Jan. 1
Cash
1,062,060.00
?
2
Premium on Bonds Payable
62,060.00
?
3
Bonds Payable
1,000,000.00
?
4
Jun. 30
Interest Expense
19,397.00
?
5
Premium on Bonds Payable
3,103.00
?
6
Cash
22,500.00
?
7
Jul. 1
Cash
1,921,280.00
?
8
Discount on Bonds Payable
78,720.00
?
9
Bonds Payable
2,000,000.00
?
10
Dec. 31
Interest Expense
19,397.00
?
11
Premium on Bonds Payable
3,103.00
?
12
Cash
22,500.00
?
13
31
Interest Expense
41,560.00
?
14
Discount on Bonds Payable
6,560.00
?
15
Cash
35,000.00
?
16
31
Income Summary
80,354.00
?
17
Interest Expense
80,354.00
?
X
Bonds Payable
Shaded cells have feedback.
Review the journal entries on the SpringFit Corporation panel, then answer the following questions.
1
Jan. 1
Cash
1,062,060.00
?
2
Premium on Bonds Payable
62,060.00
?
3
Bonds Payable
1,000,000.00
?
4
Jun. 30
Interest Expense
19,397.00
?
5
Premium on Bonds Payable
3,103.00
?
6
Cash
22,500.00
?
7
Jul. 1
Cash
1,921,280.00
?
8
Discount on Bonds Payable
78,720.00
?
9
Bonds Payable
2,000,000.00
?
10
Dec. 31
Interest Expense
19,397.00
?
11
Premium on Bonds Payable
3,103.00
?
12
Cash
22,500.00
?
13
31
Interest Expense
41,560.00
?
14
Discount on Bonds Payable
6,560.00
?
15
Cash
35,000.00
?
16
31
Income Summary
80,354.00
?
17
Interest Expense
80,354.00
?
Explanation / Answer
1)Bond1 : jan 1
Bond 2 :Jul 1
2)July 1 since bonds are issued at dicount
3)35000
4)1921280 issue price +6560 discount amortised =1927840 carrying value
5)jan 1 ,issued at premium
6)22500+22500 = 45000
7)premium amount /premium amortised per semiannual month
32060 /3103
20 semianual month or 10years
8)carrying value : 1062060-3103-3103=1055854
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