Kimmel, Financial Accounting, Be FINANCIAL ACCT (ACCT 212 le eTextbook Drief Exe

Question

Kimmel, Financial Accounting, Be FINANCIAL ACCT (ACCT 212 le eTextbook Drief Exercise 10-17 Teai Montain lnc. issues SS O milion, 10-year, 8% bones ai01, with interest payable on ianuary 1. The straight-lie method is used to amortize bond pemin Prepare the journal·ntry to record the sale of these bonds on January 1, 2017. (Credie account ??es are automatically idented when amount is entered Do not indent manualy.) Date Account Titles and Explanation Jan. I Prepare the yournal entry to record interest expense and bond premium amortization on December 31, 2017, assuming no previous accrual of interest. (Credit account ntles are automatically indiented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Dec. 31 2200 2018.2 Wiley &Sons.Inc.; All Rights Reserved. A Division of Jchn Wley & Sons.Inc 1l 0

Explanation / Answer

**Amortisation : 50000/10= 5000

Date Account Debit credit jan 1 cash   [5,000,000*101/100] 5,050,000 premium on bond payable 50,000 Bond payable 5,000,000 Dec 31 Interest expense 395000 premium on bond payable 5000 Interest payable [5000000*.08] 400,000 [Being interestaccrued for 2017]

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