Exercise 14-10 On January 1, 2017, Flounder Company sold 11% bonds having a matu

Question

Exercise 14-10 On January 1, 2017, Flounder Company sold 11% bonds having a maturity value of S480 000 or 537 493, which provides the ond olders with, a 896 yield The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Flounder Company allocates interest and unamortized discount or premium on the effective-interest basis. Prepare the journal entry at the date of the bond issuance. (Round answer to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) DateAccount Titles and Explanation Debit Credit January 1, 2017 SHOW LIST OF ACCOUNTS Prepare a schedule of interest expense and bond amortization for 2017-2019. (Round answer to O decimal places, e.g. 38,548.) Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds Date 12/31/17

Explanation / Answer

Date Account titles & Explanations Debit Credit 1/1/2017 Cash 537,493 premium on bonds payable 57,493 Bonds payable 480,000 Schedule of interest expense and Bond Premium Amortization Date Cash interest premium Carrying paid expense amortized amount of bonds 1/1/2017 537,493 12/31/2017 52,800 42999 9801 527692 12/31/2018 52,800 42215 10585 517108 12/31/2019 52,800 41369 11431 505676 cash paid 480,000*11%= 52800 interest expense CV*8% Date Account titles & Explanations Debit Credit 12/31/2017 interest expense 42,999 premium on bonds payable 9801 Bonds payable 52,800 Date Account titles & Explanations Debit Credit 12/31/2018 interest expense 42,215 premium on bonds payable 10,585 Bonds payable 52,800

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