Homework Answers
| (a) | 1 | Carrying amount of bonds at beginning=Issue price of the bond=$ 192705 | |||||||
| 2 | Cash received=$ 11900 | ||||||||
| 3 | Interest revenue=Previous carrying amount*Yield=188513*4%=7540.52=$ 7541 | ||||||||
| 4 | Bond premium amortization=Cash received-Interest revenue=11900-7541=$ 4359 | ||||||||
| (b) | Date | General journal | Debit | Credit | |||||
| 12/31/15. | Cash | 192705 | |||||||
| Premium on issue of bonds | (192705-170000) | 22705 | |||||||
| Bonds payable | 170000 | ||||||||
| (Issuance of the bond) | |||||||||
| c) | Date | General journal | Debit | Credit | |||||
| 12/31/16. | Interest expense | 7708 | |||||||
| Premium on issue of bonds | 4192 | ||||||||
| Cash | 11900 | ||||||||
| (Bond amortized) | |||||||||
| (d) | Date | General journal | Debit | Credit | |||||
| 1/31/17. | Interest expense | 7541*(1/12) | 628 | ||||||
| Interest payable | 628 | ||||||||
| (Interest accrued for 1 month-Jan) | |||||||||
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