Question

On 09-01-15, O issued $8,000,000 of its 6%, 5-year callable term bonds dated 09-30-15. The bonds pay interest every September 01 and March 01. O can call in the bonds any time after 09-01-18 at 101. At the time O issued the bonds, similar bonds paid 6%. Upon issuing the bonds, O incurred and paid $74,000 of bond issuance costs. O uses the effective-interest method to amortize any bond discount or premium. O prepares AJEs only as of every December 31. On July 01, 2019, G called in $6,000,000 of the bonds at the call price of 101 plus interest. Prepare the entries O should make on:

a. 09-01-15

b. 12-31-15

c. 03-01-16

d. 09-01-16

e. 07-01-19

f. 09-01-19

g. 12-31-19

h. 03-01-20

i.09-01-20

Answer 1

solution: Page-1 Trans | Geneal Sournal Ibebit coedit g 1- Sep | cash Bonds Payable $8,000,000.00 $8,000,000.00 $ 31-Dec Interest Expense $160,000.00 Interest Payable on bond $160,000.00 911-Mar Interest payable on bond $160,000.00 Interest Expenses $80,000.00 cash $240,000.00 $240,000.00 d 1-Sep Interest Expenses cash $240,000.00 1 - Jul Lass on Redemption | Bonds Payable . cash $60,000.00 $6,000,000.00 $6,060,000.00

Page 2 1- Sep Interest Expenses cash Interest Ex $180,000.00 $180,000.00 9) 31- Dec Interest Expense $40,000.00 Interest Payable on bond $40,000.00 $40,000.00 by e-Mar Interest payable on bond Interest Expenses $20,000.00 cash $60,000.00 9) 1-Sep $60,000.00 Interest Expenses cash $ 60,000.00