Brief Exercise 14-3 The Ivanhoe Company issued $300,000 of 13% bonds on January
ID: 2574525 • Letter: B
Question
Brief Exercise 14-3 The Ivanhoe Company issued $300,000 of 13% bonds on January 1, 2017, The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 97 Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Ivanhoe Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to o decimal places, e.g. 38,548.) Phis Date Account Titles and Explanation Credit (a) January 1, 2017Explanation / Answer
Exercise 14-3
Entry On issue of Bonds @ 97
Jan-01
A)Bank a/c Dr 291000
Discount on issue of Bonds a/c Dr. 9000
To Bonds a/c 300000
(Being Bonds issued at discount of Rs.3 (100-97)
Jul-01
Interest on Bonds a/c dr. 19500
To Bank a/c 19500
(Being Interest paid (300000*13%*6/12)
Dec-31
Interest on Bonds a/c dr. 19500
To Interest payable 19500
(Being Interest accrued (300000*13%*6/12)
Exercise 14-4
If Bonds issued at premium i.e., @ 102
Jan-01
Bank a/c Dr.
234600
Premium on bonds payable
4600
Bonds payable
230000
Jul-01
Interest on Bonds a/c dr. 14950
To Bank a/c 14950
(Being Interest paid (230000*13%*6/12)
Dec-31
Interest on Bonds a/c dr. 14950
To Interest payable 14950
(Being Interest accrued (230000*13%*6/12)
Exercise 14-5
May-01
A)Bank a/c Dr 685440
To Bonds a/c 672000
To Interest accrued on Bonds a/c 13440
(Being Bonds issued at par plus Interest)
Jul-01
Interest on Bonds a/c dr. 6720
Interest accrued on Bonds a/c dr. 13440
To Bank a/c 20160
(Being Interest paid (672000*6%*2/12)
Dec-01
Interest on Bonds a/c dr. 20160
To Interest payable 20160
(Being Interest accrued (672000*6%*6/12)
Exercise 14-10
Jan-01
A)Cash a/c Dr $65000
To Bonds a/c $65000
(Being Bonds issued at discount at Par)
Dec-31
Interest on Bonds a/c dr. 5850
To Bank a/c 5850
(Being Interest paid (65000*9%*12/12)
Exercise 14-11
Jan-01
On issue of Zero coupon bond
Bank a/c Dr. $45,394
Discount on Bond payable $34606
To Bonds payable $80000
Jul-01: No entry
Dec-31: No entry
Bank a/c Dr.
234600
Premium on bonds payable
4600
Bonds payable
230000
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