Question

Need Help with Part 3 and Part 4.

P10-11 Recording Bond Issuance and Interest Payments (Straight-Line LO10-4 The following information appwes to the questions dispiayed below. Commonwealth Company Issued bonds with the following provislons FV of $1, PV of $1, FVA or $1, and PVA of ST: (Use the appropriate factors) from the tables provided.) Maturity value: $300.000 Interest: 11 percent per annum payabie annually each December 31 Terms: Bonds dated January 1 2014, due ive years from that date The annual accounting perlod ends December 31. The bonds were sold on January 1. 2014, at a 10 percent market rate. Section Break P10-11 Recording Bond Issuance and Interest Payments (Stralght-Line 0.60 points P10-11 Part 1 Required issue (sale) price of the bonds. 5 311,388 References eBook & Resources Problem Difficulty: Medium P10-11 Part 1 Learning Objective: 10-04 Report bonds payable and interest expens premium Check my work 0.60 points P10-11 Part 2 2. Prepare the journal entry to record the issuance of the bonds. (lf no entry is required for a transactionlevent, select "No journal entry required in the first account field.) Vew transaction st Vlew Journal entry worksheet No Date Debit /1January 01, 2014 Cash 311,368 Premium on bonds payable Bonds payable 11,368 300,000

Answer 1

Journal Entries Date Account Title and Explaination Post Ref. Debit Credit S30,726.80 $2,273.20 Dec.31 Bond Interest Expense Premium on Bonds Payable($11366/5) Cash S33,000.00 To record Interest Payment on December 31)

4.a. Interest Expense would be Reported in Income Statement on December 31. 2014: Interest Expense 30,726.80 4.b. Reporting of Liabilitv relating to Bonds as on December 31, 2014: Long Term Liabilities: Bonds Payable S 300,000.00 dd: Premium on Bonds Payable 11,366.00 Less: Amortization (2,273.20) S 9,092.80 $309,092.80