ACC2000 Fal 2017 On January 1. 2017, Bargain Compa is paid annualy on January 1,

Question

ACC2000 Fal 2017 On January 1. 2017, Bargain Compa is paid annualy on January 1, Prepare the entry to record the issuance of the bonds ny issued $1,000,000 of 10 year, 8% bonds for 98, interest Prepare the year-end adjusting entry Show how the above information related to the bond will appear on the baiance sheet for the year ended December 31, 2017 Extra Company has $1.500,000 of bonds outstanding. The unamortized premium is $19,600. The bonds were redeemed at 101. Prepare the necessary journai entry

Explanation / Answer

Bargan company Date Accounting titles & Explanations Debit Credit 1/1/2017 cash (1,000,000*98%) 980000 discount on bonds 20,000 bonds payable 1,000,000 12/31/2017 interest expense 82,000 discount on bonds (20000/10) 2,000 interest payable (1,000,000*8%) 80000 balance sheet (partial) current liabilities interest payable 80,000 long term liabilities bonds payable 1,000,000 less discount on bonds payable -18,000 982,000 Extra company Date Accounting titles & Explanations Debit Credit bonds payable 1,500,000 premium on bonds payable 19,600 gain on redemption 4,600 cash (1,500,000*1.01) 1515000 Admire County Date Accounting titles & Explanations Debit Credit 1-Jan Cash 600,000 Notes payable 600,000 30-Jun interest expense 24000 interest payable 24,000 (600,000*8%*6/12) 30-Sep Notes payable 600,000 interest payable 24,000 interest expense (600000*8%*3/12) 12000 cash 636,000

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