Question

SpringFit Corporation Bonds Payable 20Y5 Journal Entries Final Questions SpringFit Corporation DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LABILITIES Jan. 1 Cash 1,008,960.00 Premium on Bonds Payable 58,960.00 Bonds Payable 950,000.00 Jun. 30 Interest Expense 18,427.00 Premium on Bonds Payable 2,948.00 Cash 21,375.00 Jul. 1 Cash 1,921,280.00 Discount on Bonds Payable 78,720.00 Bonds Payable 2,000,000.00 Oct. 1 Cash 1,100,000.00 10 1,100,000.00 Notes Payable 11 18,427.00 Interest Expense Dec. 31 12 2,948.00 Premium on Bonds Payable 13

Answer 1

Answer-1-2

2-July 1

3- Interest on 01st July bond = 35,000 (Dec'31 entry for interest payment on discount bonds)

Note : Assumption here is interest paid implies actual cash interest paid and not the interest expense.

However, If question mean the interest expense, the answer will be $41,560

4- Carrying amount of Discount bonds = 2,000,000 (01st July entry i.e. Cash+Discount)

5-Jan.1

6-$42,750

7-10 years

8- Carrying amount of Premium Bonds = 950,000 (01st Jan Entry i.e. cash-Premium)

9) Interest accrued on notes payable = 16,500 (Dec 31st, 2nd Entry)

b-1-

Yearly payment amount for notes paybles:

Amount paid for notes ( Installment Amount) = 251,451*2 = 502,902 (30th June Entry-assume equal amount paid for each 6 months)