PROBLEM II (50%) Koresh Corp. issued $5,000,000, 6%, 10-year bonds, dated April 1, with interest payment...

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PROBLEM II (50%) Koresh Corp. issued $5,000,000, 6%, 10-year bonds, dated April 1, with interest payment dates of September 3

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Answer 1

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A.

Transaction / Event	Date	Account Titles	Debit	Credit
			$	$
1.	Apr 1, 2019	Cash	4,800,000
		Discount on Bonds Payable	200,000
		Bonds Payable		5,000,000
2.	Sept. 30, 2019	Interest Expense	160,000
		Discounts on Bonds Payable [200,000 / ( 10 x 2 ) ]		10,000
		Cash		150,000
3.	Sept. 30, 2019	Interest Expense ( 4,800,000 x 8 % x 1/2 )	192,000
		Discount on Bonds Payable		42,000
		Cash		150,000
4.	Dec 31, 2019	Interest Expense	80,000
		Discount on Bonds Payable		5,000
		Interest Payable		75,000
5.	Dec 31, 2019	Retained Earnings	240,000
		Interest Expense		240,000

B.

Transaction / Event	Date	Account Titles	Debit	Credit
			$	$
1.	Apr. 1, 2019	Cash	5,150,000
		Premium on Bonds Payable		150,000
		Bonds Payable		5,000,000
2.	Sept 30, 2019	Interest Expense	142,500
		Premium on Bonds Payable	7,500
		Cash		150,000
3.	Sept. 30, 2019	Interest Expense ( 5,150,000 x 4 % x 1/2 )	103,000
		Premium on Bonds Payable	47,000
		Cash		150,000
4.	Dec 31, 2019	Interest Expense	71,250
		Premium on Bonds Payable	3,750
		Interest Payable		75,000
5.	Dec 31, 2019	Retained Earnings	213,750
		Interest Expense		213,750

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