More Info Car 2014 Jan Jul Dec 2015 1 1 31 Issued $8,000,000 of 6%, 10-year bond

Question

More Info Car 2014 Jan Jul Dec 2015 1 1 31 Issued $8,000,000 of 6%, 10-year bonds payable at 95, Interest payment dates are July 1 and January 1 Paid semiannual interest and amortized bond discount by the straight-line method on the 6% bonds payable. Accrued semiannual interest expense and amortized bond discount by the straight-line method on the 6% bonds payable. Jan 1 Paid semiannual interest. ntere 2024 Jan 1 Paid the 6% bonds at maturity. Print Done any number in the input fields and then continue to the next question.

Explanation / Answer

2014

jan1

cash a/c

discount on issue of debentures

to 6% bonds

( being bonds issued at discount)

7600000

400000

interest a/c

to bonds holders

( being interest becomes due)

* 8000000*6%*6/12=240000

bonds holders a/c

to bank

240000

240000

240000

240000

reserves and surplus a/c

to discount on bonds

* (400000/10)*6/12=20000

interest a/c

to interest outstanding

being interest becomes due.

* reserves and surplus a/c

to discount on bonds

being discount written off

240000

20000

240000

20000

2015

jan 1

interest outstanding a/c

to bank

being interest paid

2024

jan 1

6% bonds a/c

to bank

( being bonds paid at maturity.)

2 carrying amount of bonds payable is $8000000

3.a interest expense for the period ended july 1 2014 is 240000( calculated above)

3.b.cash interest paid is 240000

DATE PARTICULARS DEBIT CREDIT

2014

jan1

cash a/c

discount on issue of debentures

to 6% bonds

( being bonds issued at discount)

7600000

400000

8000000 july 1

interest a/c

to bonds holders

( being interest becomes due)

* 8000000*6%*6/12=240000

bonds holders a/c

to bank

240000

240000

240000

240000

july 1

reserves and surplus a/c

to discount on bonds

* (400000/10)*6/12=20000

20000 20000 dec 31

interest a/c

to interest outstanding

being interest becomes due.

* reserves and surplus a/c

to discount on bonds

being discount written off

240000

20000

240000

20000

2015

jan 1

interest outstanding a/c

to bank

being interest paid

240000 240000

2024

jan 1

6% bonds a/c

to bank

( being bonds paid at maturity.)

8000000 8000000

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