Question

Flounder Co. sells $423,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. The bonds yield 10%. On October 1, 2021, Flounder buys back $131,130 worth of bonds for $136,130 (includes accrued interest). Give entries 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. (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 Premium Amortized Carrying Amount of Bonds 450339 25380 2517 2863 447476 25380 22374 3006 444470 25380 22223 3157 441313 Date 6/1/20 12/1/20 6/1/21 12/1/21 6/1/22 12/1/22 6/1/23 12/1/23 6/1/24 25380 22066 3314 437999 25380 21900 3480 434519 25380 21726 3654 430865 21543 427028 25380 25380 21352 4028 423000 * Difference due to rounding Prepare all of the relevant journal entries from the time of sale until December 31, 2022. (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 0 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.)
Please help with the journal entries for both the premium amortized and discount amortized. Thanks in advance!

Answer 1

Answer to first question in the list (Flounder Co.):

Schedule of Bond Discount Amortization Effective-Interest Method Account Title and Explanation Credit Debit Date 6/1/20 $450,339 Cash Bonds Payable Premium on Bonds Payable Bonds Sold to Yield $423,000 $27,339 --> $450339 - $423000 Carrying Amount of Bonds $22,517 $2,863 12/1/20 Interest Expense Premium Amortized Cash Interest Premium on Bonds Payable Cash Interest Expense Premium on Bonds Payable Date Paid Expense $25,380 6/1/21 $22,374 $3,006 6/1/20 450339 $25,380 Cash 12/1/20 447476 22517 2863 25380 12/1/21 Interest Expense $22,223 $3,157 Premium on Bonds Payable Cash 6/1/21 444470 25380 22374 3006 $25,380 $22,066 $3,314 6/1/22 Interest Expense 12/1/21 25380 22223 3157 441313 Premium on Bonds Payable $25,380 Cash 6/1/22 437999 12/1/22 Interest Expense $21,900 $3,480 22066 3314 25380 Premium on Bonds Payable 12/1/22 $25,380 Cash 3480 434519 25380 21900 12/31/22 Interest Expense $3,621 $609 I$434519 x 10% x (1/12)] 6/1/23 Premium on Bonds Payable Interest Payable 25380 21726 3654 430865 $4,230 [$25380 x (1/6)] 12/1/23 427028 25380 21543 3837 NOTE: 6/1/24 25380 21352 4028 423000 For entry on 12/31/22, Interest expense and interest payable are recognized for one month because last coupon payment was made on 12/12/22 only.