Question

Page Break 4.On July 1, 2019, Gedex Company paid $180,000 to purchase $200,000 of bonds that carry a 5% contract rate of interest and will mature in 5 years from the date of purchase. Interest on the bonds is paid June 30 and December 31 of each year. Godox Company is a public company that prepares its financial statements in accordance with IFRS. It plans to hold the bonds until maturity and amortizes the premium or discount on bonds by the effective-interest method. As of December 31, 2019, the bonds had a market value of $185,000. (20 marks) (Long term Liability) a. Prepare all necessary journal entries for 2019 dealing with the investment in bonds. tin N

Answer 1

ANSWER

Credit ($) Date Particulars July-01 Cash Discount on bonds payable Bonds payable (to record purchase bonds at discount) Debit ($) 180000 20000 200000 5000 500 June-30 Bonds interest expense Discount on bonds payable Cash (To record interedt payment and discoount amortization) 4500 Dec-31 5000 500 Bonds interedt expense Discount on bonds payable Cash (To record interest payment and discount amortization) 4500

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