Your answer is partially correct. Try again. Sandhill Co. issued $480,000, 9%, 1

Question

Your answer is partially correct. Try again. Sandhill Co. issued $480,000, 9%, 15-year bonds on December 31, 2016, for $460,800. Interest is payable annually 31. Sandh ill uses the straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are a utomatically indented whe is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2017 (a The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. No. Date Account Titles and Explanation Debit Credit (a) Dec. 31, 2016 [cash 460800 Discount on Bonds Payable 19200 Bonds Payable 480000 (b) Dec. 31, 2017 Interest Expense Discount on Bonds Payable Cash (c) Dec. 31, 2031 [Bonds Payable 480000 Cash 480000 LINK TO TEXT LINK TO TEXT

Explanation / Answer

ANS) SANDHILL COMPANY Journal Entries (a) Cash A/C $         460,800.00 To Discount on bonds payable $            19,200.00 To Bonds Payable $             480,000.00 (b) Journal Entry of interest payment on 31st december 2017 Bonds Interest Expense $            43,200.00    To Discount on bonds payable $                  1,280.00     To Cash $               41,920.00 This entry will be same every year Bonds discount amortization schedule (A) (B) (C ) (D) (E ) (f) (g) Period Interest Payment Interest Expense Bond discount Bond discount account Bonds Payable Account Book Value of the bonds (C )=(B)-(D) Face Value 31-Dec-16 $                       19,200.00 $                       480,000.00 $                         460,800.00 31-Dec-17 $            43,200.00 $               41,920.00 $              1,280.00 $                       17,920.00 $                         462,080.00 31-Dec-18 $            43,200.00 $               41,920.00 $              1,280.00 $                       16,640.00 $                         463,360.00 31-Dec-19 $            43,200.00 $               41,920.00 $              1,280.00 $                       15,360.00 $                         464,640.00 31-Dec-20 $            43,200.00 $               41,920.00 $              1,280.00 $                       14,080.00 $                         465,920.00 31-Dec-21 $            43,200.00 $               41,920.00 $              1,280.00 $                       12,800.00 $                         467,200.00 31-Dec-22 $            43,200.00 $               41,920.00 $              1,280.00 $                       11,520.00 $                         468,480.00 31-Dec-23 $            43,200.00 $               41,920.00 $              1,280.00 $                       10,240.00 $                         469,760.00 31-Dec-24 $            43,200.00 $               41,920.00 $              1,280.00 $                         8,960.00 $                         471,040.00 31-Dec-25 $            43,200.00 $               41,920.00 $              1,280.00 $                         7,680.00 $                         472,320.00 31-Dec-26 $            43,200.00 $               41,920.00 $              1,280.00 $                         6,400.00 $                         473,600.00 31-Dec-27 $            43,200.00 $               41,920.00 $              1,280.00 $                         5,120.00 $                         474,880.00 31-Dec-28 $            43,200.00 $               41,920.00 $              1,280.00 $                         3,840.00 $                         476,160.00 31-Dec-29 $            43,200.00 $               41,920.00 $              1,280.00 $                         2,560.00 $                         477,440.00 31-Dec-30 $            43,200.00 $               41,920.00 $              1,280.00 $                         1,280.00 $                         478,720.00 31-Dec-31 $            43,200.00 $               41,920.00 $              1,280.00 $                                      -   $                         480,000.00 Total $         648,000.00 $             628,800.00 $           19,200.00 C) Journal Entry of Redemption of Bonds at maturity on Dec 31st, 2031 Bonds Payable $         480,000.00     To Cash $             480,000.00

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