Question

At December 31, 2014, Northwest's bond accounts appear as fallaws (Click the lcon to vlew the accounts.) What would Northwwast Airlinas 2014 income statement and year-end balance sheat report for these bonds? Suppose Northwest Airlines issued $90,000 af 5%, fiva-yaar bonds when the arket interest rate is 10% Thn market price of the bonds drop, and Southwest receives $72,635 at issuance. The traneaction was recorded as fallows 1 (Cick the icon to visw the transaction.) Northwresfs journal entries to record interest experise and amortize the bond discount in the first year fellow 1 (Cick the icon to viaw tha journal entrias.) Begin by completing the income statement for 2014. More Into 1 More Info Income Statement for 2014 Joumal Entry Now complete the balance sheet at December 31, 2014. Bonds Payable Discount on Bunds Payable Accounts and Explanation Credit Balance Sheet at December 31, 2014 72,635 17.365 2014 Cash 1.451 Current liabiitics Ja Discount on Bonds Payable Bonds Payable To iesue bonde al a ciscont 90,000 Long-term liablities Bond carrying amount, 575,468 S90,000-S14,532 More Info Print Done Journal Entry Date 2014 Jul 1 Accounts and Explanation Credit Interest Expense 3,632 Discount on Bonds Payable 1.302 Cagh 2,250 To pay saminnu interast and amartizs bond disccun Dec 31 Interest Expense 3,701 Discount an Bonds Payable Interes: Payable 1,451 2,250 To acarue sermiannaa idereat and amartize bond aiscont Choose from any list or enter any number in the input fieds and then contin Print Done

Answer 1

Income statement for 2014 :

Interest expense (3632+3701)	7333

Balance sheet :

Current liabilities
Interest payable		2250
Long term liabilities
Bonds payable	90000
Less; Discount on bonds payable	-14532	75468