Question

CALCULATOR PRINTER VERSION BACK NEXT Founder Cases $423,000 of 12 bonds on June 1, 2020. The bonds pay interest on December 1 mnd June 1. The due date of the bonds is June 1, 2024. The bands yield 10%. On October 1, 2021, Founder buys back $131,130 worth of bonds for $13,130 des accrued interest). Greentes through December 1, 2022 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. (Hound answers to decimal places, eg 38,548) Schedule of Bend Discount Amortization Effective interest Method Bonds Sold to Yield Carrying Interest Premium Amount of Date Amortired 6/1/20 12/1/20 6/1/21 12/1/21 61/22 13/1/22 61/23 12/1/23 W1/24 cung Prepare the relevant ouma entries from the time of sale until December 31, 2022 (Assume that no reversing entries were made) (Round present wate places 1.25124 and the final answers to decimal places . 5971. I n try is required select "entry for the accounts and enter account titles are automatically dested when montantered. Do no t many r call e the amount d

Please show all work. Thanks!

Answer 1

Flounder co. Maturity value of bonds payable 423000 286303 164036 Present value of $423,000 due in 8 periods at 5% Present value of $24,000 semiannual interest Proceeds from sale of bonds Premium on Bonds Payable -450339 27339 Date 1.6.2020 Particulars Cash a/c Dr. To Premium on Bonds Payable To Bonds Payable Debit in $ Credit in $ 450339 27339 423000 1.12.2020 Interest Expense a/c Dr. Premium on Bonds Payable a/c Dr. To Cash 22517 2863 25380 31.12.2020 Interest Expense a/c Dr. 3729 Premium on Bonds Payable a/c Dr. 501 To Interest Payable 1/6 months completed-use amortization table amounts x 1/6 4230 1.6.2021 Interest Expense a/c Dr. 18645 Interest Payable a/c Dr. 4230 Premium on Bonds Payable a/c Dr. 2505 To Cash 5/6 months completed-use amortization table amounts x 5/6 25380 1.10.2021 Interest Expense a/c Dr. 4371 Premium on Bonds Payable a/c Dr. 874 To Cash 4/6 months completed AND 31% of bonds redeemed = amortization table x 20.67% 5245 130885 Reacquisition price ($136,130-($131,130 x 12% x 4/12) Net carrying value of bonds redeemed: Par value Unamortized Premium (31% of $27,339-$2,863-$3,006) - $874 Gain on redemption -131130 -5782 6027

Dr. 131130 5782 1.10.2021 Bonds Payable a/c Premium on Bonds Payable a/c Dr. To Gain on Redemption of Bonds To Cash 6027 130885 1.12.2021 Interest Expense a/c Dr. 15556 Premium on Bonds Payable a/c Dr. 2210 To Cash 17766 5/6 months completed-use amortization table amounts x 5/6 x 70% 31.12.2021 Interest Expense a/c Dr. 2574 Premium on Bonds Payable a/c Dr. 387 To Interest Payable 2961 1/6 months completed-use amortization table amounts x 1/6 x 70% 1.6.2022 Interest Expense a/c Dr. 12872 Interest Payable a/c Dr. 2961 Premium on Bonds Payable a/c Dr. 1933 To Cash 17766 5/6 months completed-use amortization table amounts x 5/6 x 70% 1.12.2022 Interest Expense a/c Dr. 15330 Premium on Bonds Payable a/c Dr. 2436 To Interest Payable 17766 Based on amortization table x 70% of bonds remaining after redemption

Schedule of Bond Amortization Effective Interest Method 12% Bond sold to Yield 10% Carrying Interest Premium Amount of Date Cash Paid Expense Amortized Bonds 1.6.2020 450339 1.12.2020 25380 22517 2863 447476 1.6.2021 25380 22374 3006 444470 1.12.2021 25380 22223 3157 441313 1.6.2022 25380 22066 3314 437999 1.12.2022 25380 21900 3480 434519 1.6.2023 25380 21726 3654 430865 1.12.2023 25380 21543 3837 427028 1.6.2024 25380 21352 4028 423000