Question

Review the following transactions of Lamore Communications, Inc.: (Click the icon to view the transactions.) Read the requirements Requirement 1. Journalize the transactions of Lamore Communications Inc. (Record debits first, then credits. Exclude explanations from any journal entries.) January 1, 2018: Issued $3,000,000 of 9%, 10-year bonds payable at 94. Interest payment dates are July 1 and January 1 Journal Entry Accounts Date Debit Credit 2018 Jan 1

Answer 1

Lamore communications Inc. Date Jan.1,18 Account Title Cash ( 3000000 * 94 %) Discount on Bonds Payable Bonds Payable Debit ($) Credit ($) 2820000 180000 3000000 July 1, 18 144000 Interest Expense Discount on Bonds Payable ( 180000/ 20) Cash ( 3000000 * 4.5%) To record interest Expense) 9000 135000 Dec. 31,18 144000 Interest Expense Discount on Bonds Payable (180000/ 20) Accrued intt. payable ( 3000000 * 4.5%) (To record interest Expense ) 9000 135000 Jan. 1,19 Accrued intt. payable ( 3000000 * 4.5%) Cash 135000 135000 Jan.1, 2028 3000000 Bonds Payable Cash 3000000 Req. 2 3000000 Carrying amount (2018) Bonds Payable Less:- Discount on Bonds Payable (180000 - 9000 - 9000) Carrying value 162000 2838000 Req. 3 Interest Expense Cash intt. Paid 144000 135000 Amotisation of Discount on Bonds Payable causes the intt. Exp. To exceed cash intt. Paid.