Question

Problem 14-05 (Part Level Submission) In each of the following independent cases, the company closes its books on December 31. (a) Pina Co. sells $467,000 of 10% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021. Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to o decimal places, e.g. 38,548.) Schedule of Bond Discount Amortization Effective-Interest Method Bonds Sold to Yield Cash Paid Interest Expense Discount Amortized Carrying Amount of Bonds Date 3/1/20 9/1/20 3/1/21 9/1/21 3/1/22 9/1/22 3/1/23 9/1/23 Prepare all of the relevant journal entries from the time of sale until December 31, 2021. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to o decimal places e.g. 58,971. 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.)

Answer 1

Semi-annual Payment (467000*10%*6/12)	$         23,350
Maturity Value of Bonds	$       467,000
Present Value of $ 4670,000 due in 7 periods at 6%	$       310,583
( $ 500,000 X 0.66506) (A)
Present Value of interest payable semiannually	$       130,349
($ 25,000 X 5.58238) (B)
Proceeds from sale of bonds (A)+ (B)	$      -440,932
Discount on Bonds Payable	$         26,068

Schedule of Bond Discount Amortization
Effective Interest Method
10% Bonds Sold to Yield 12%
Date	Credit Cash	Debit Interest Expense	Credit Bond Discount	Carrying Value of Bonds
1-Mar-20				$ 440,932
1-Sep-20	$   23,350	$   26,456	$     3,106	$ 444,038
1-Mar-21	$   23,350	$   26,642	$     3,292	$ 447,330
1-Sep-21	$   23,350	$   26,840	$     3,490	$ 450,820
1-Mar-22	$   23,350	$   27,049	$     3,699	$ 454,519
1-Sep-22	$   23,350	$   27,271	$     3,921	$ 458,440
1-Mar-23	$   23,350	$   27,506	$     4,156	$ 462,596
1-Sep-23	$   23,350	$   27,754	$     4,404	$ 467,000

1-Mar-20	Cash	$ 440,932
	Discount on Bonds Payable	$   26,068
	Bonds Payable		$ 467,000
1-Sep-20	Interest Expense	$   26,456
	Discount on Bonds Payable		$     3,106
	Cash		$   23,350
31-Dec-20	Interest Expense	$   17,761
	Discount on Bonds Payable ($ 3525 X 4/6)		$     2,195
	Interest Payable ( $ 25,000 X 4/6)		$   15,567
1-Mar-21	Interest Expense	$     8,881
	Interest Payable	$   15,567
	Discount on Bonds Payable ($ 3525 X 2/6)		$     1,097
	Cash		$   23,350
1-Sep-21	Interest Expense	$   26,840
	Discount on Bonds Payable		$     3,490
	Cash		$   23,350
31-Dec-21	Interest Expense	$   17,893
	Discount on Bonds Payable ($ 3525 X 4/6)		$     2,327
	Interest Payable ( $ 25,000 X 4/6)		$   15,567