Xonic Corporation issued 7.6 million of 20 year, 8 percent bonds on April 1, 201

Question

Xonic Corporation issued 7.6 million of 20 year, 8 percent bonds on April 1, 2018, at 102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2038. Xonics fiscal year ends on decemer 31.

a-c. Record the issuance of the bonds and entries after the issue. (If no entry is required for a transaction/event, select "No Journal Entry Required' in the first account field. Enter your answers in dollars.)

A. Record the issuance of bonds

B.Record the bond interest and amortize bond premium.

C.Record the final interest payment and amortize bond premium.

D.Record the retirement of the bonds.

Step by Step solution please.

Explanation / Answer

Xonic Corporation Bonds amortization schedule using straight-line method Period Interest payment (A) PVIF@4% Present Value of cash flows Interest Expense C=A-B premium amortization(B) Balance Premium to be amortized Book Value of Bonds 0 -760000000 1 15200000 760000000 1 30400000 0.961538462 29230769.23 30020000 380000 14820000 760000000 2 30400000 0.924556213 28106508.88 30020000 380000 14440000 760000000 3 30400000 0.888996359 27025489.3 30020000 380000 14060000 760000000 4 30400000 0.854804191 25986047.41 30020000 380000 13680000 760000000 5 30400000 0.821927107 24986584.05 30020000 380000 13300000 760000000 6 30400000 0.790314526 24025561.58 30020000 380000 12920000 760000000 7 30400000 0.759917813 23101501.52 30020000 380000 12540000 760000000 8 30400000 0.730690205 22212982.23 30020000 380000 12160000 760000000 9 30400000 0.702586736 21358636.76 30020000 380000 11780000 760000000 10 30400000 0.675564169 20537150.73 30020000 380000 11400000 760000000 11 30400000 0.649580932 19747260.32 30020000 380000 11020000 760000000 12 30400000 0.62459705 18987750.31 30020000 380000 10640000 760000000 13 30400000 0.600574086 18257452.22 30020000 380000 10260000 760000000 14 30400000 0.577475083 17555242.52 30020000 380000 9880000 760000000 15 30400000 0.555264503 16880040.88 30020000 380000 9500000 760000000 16 30400000 0.533908176 16230808.54 30020000 380000 9120000 760000000 17 30400000 0.513373246 15606546.67 30020000 380000 8740000 760000000 18 30400000 0.493628121 15006294.88 30020000 380000 8360000 760000000 19 30400000 0.474642424 14429129.69 30020000 380000 7980000 760000000 20 30400000 0.456386946 13874163.16 30020000 380000 7600000 760000000 21 30400000 0.438833602 13340541.5 30020000 380000 7220000 760000000 22 30400000 0.421955387 12827443.75 30020000 380000 6840000 760000000 23 30400000 0.405726333 12334080.53 30020000 380000 6460000 760000000 24 30400000 0.390121474 11859692.82 30020000 380000 6080000 760000000 25 30400000 0.375116802 11403550.79 30020000 380000 5700000 760000000 26 30400000 0.360689233 10964952.68 30020000 380000 5320000 760000000 27 30400000 0.34681657 10543223.73 30020000 380000 4940000 760000000 28 30400000 0.333477471 10137715.13 30020000 380000 4560000 760000000 29 30400000 0.320651415 9747803.007 30020000 380000 4180000 760000000 30 30400000 0.308318668 9372887.506 30020000 380000 3800000 760000000 31 30400000 0.296460258 9012391.833 30020000 380000 3420000 760000000 32 30400000 0.28505794 8665761.378 30020000 380000 3040000 760000000 33 30400000 0.274094173 8332462.863 30020000 380000 2660000 760000000 34 30400000 0.26355209 8011983.523 30020000 380000 2280000 760000000 35 30400000 0.253415471 7703830.31 30020000 380000 1900000 760000000 36 30400000 0.243668722 7407529.144 30020000 380000 1520000 760000000 37 30400000 0.234296848 7122624.177 30020000 380000 1140000 760000000 38 30400000 0.225285431 6848677.094 30020000 380000 760000 760000000 39 30400000 0.216620606 6585266.436 30020000 380000 380000 760000000 40 30400000 0.208289045 6331986.958 30020000 380000 0 760000000 40 760000000 0.208289 158299640 760000000 Date/S.N. Account title & Explanation Debit Credit Amount in $ Amount in $ April 1, 2018 Cash 775200000 Bonds 760000000 Premium on Bonds 15200000 To record the issuance of bonds September 30, 2018 Interest Expense 30020000 Premium on Bonds 380000 Cash 30400000 To record the Interest expense and amortization of bonds March 31, 2038 Interest Expense 15010000 Interest payable 15010000 Premium on Bonds 380000 Cash 30400000 To record the Interest expense and amortization of bonds March 31, 2038 Bonds 760000000 Cash 760000000 To record the retirement of bonds on maturity If this solution does not fit, let me know, I will provide alternate solution in which premium will be amortized using effective interest method

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