1 | Date | Account titles and explanation | Debit | Credit | ||||
2016 | ||||||||
July 1. | Cash | 63532267 | ||||||
Discount on issue of bonds | (74000000-63532267) | 10467733 | ||||||
Bonds payable | 74000000 | |||||||
(Bonds issued at discount) | ||||||||
Oct 1. | Cash | 200000 | ||||||
Notes payable | 200000 | |||||||
(Borrowed from bank) | ||||||||
Dec 31. | Interest expense | 3000 | ||||||
Interest payable | 3000 | |||||||
(Interest due on the note) | ||||||||
Dec 31. | Interest expense | (4070000+261693) | 4331693 | |||||
Discount on issue of bonds | 261693 | |||||||
Cash | (74000000*11%*6/12) | 4070000 | ||||||
(Semi-annual interest on bond paid) | ||||||||
Dec 31. | Income summary | (3000+4331693) | 4334693 | |||||
Interest expense | 4334693 | |||||||
(Interest expense closed) | ||||||||
2017 | ||||||||
June 30. | Interest expense | (4070000+261693) | 4331693 | |||||
Discount on issue of bonds | 261693 | |||||||
Cash | (74000000*11%*6/12) | 4070000 | ||||||
(Semi-annual interest on bond paid) | ||||||||
Sept 30. | Interest expense | (12000-3000) | 9000 | |||||
Interest payable | 3000 | |||||||
Notes payable | 28673 | |||||||
Cash | 40673 | |||||||
(Installment on notes paid) | ||||||||
Dec 31. | Interest expense | 2570 | ||||||
Interest payable | 2570 | |||||||
(Interest due on the note) | ||||||||
Dec 31. | Interest expense | (4070000+261693) | 4331693 | |||||
Discount on issue of bonds | 261693 | |||||||
Cash | (74000000*11%*6/12) | 4070000 | ||||||
(Semi-annual interest on bond paid) | ||||||||
Dec 31. | Income summary | 2570+9000+(4331693*2) | 8674956 | |||||
Interest expense | 8674956 | |||||||
(Interest expense closed) | ||||||||
2018 | ||||||||
June 30. | Bonds payable | 74000000 | ||||||
Loss on redemption of bonds | (Balancing figure) | 7940961 | ||||||
Discount on issue of bonds | 9420961 | |||||||
Cash | (Note:1) | 72520000 | ||||||
(Redemption of bonds) | ||||||||
Sept 30. | Interest expense | (10280-2570) | 7710 | |||||
Interest payable | 2570 | |||||||
Notes payable | 30393 | |||||||
Cash | 40673 | |||||||
(Installment on notes paid) | ||||||||
Note:1 | ||||||||
Redemption value=Number of bonds*Redemption value | ||||||||
Number of bonds=Bond face value/Par value=74000000/100=740000 | ||||||||
Redemption value=740000*98=$ 72520000 | ||||||||
2 | Interest expense | |||||||
2016 | 2017 | |||||||
$ | $ | |||||||
On bonds | 4331693 | 8663386 | ||||||
(4331693*2) | ||||||||
On notes | 3000 | 11570 | ||||||
(9000+2570) | ||||||||
Total | 4334693 | 8674956 | ||||||
3 | Carrying amount of the bonds as on Dec 31,2017=Bond issue price-Discount amortized till Dec 31,2017=63532267-(261693*3)=63532267-785079=$ 62747188 | |||||||
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