Question

On January 1, 2020, Wildhorse Corporation issued 11% bonds with a par value of $5,170,000, due in 10 years. The company incurred $195,000 in costs associated with the issuance of the bonds, which were capitalized. The bonds were issued at 102, and paid interest on January 1 and July 1 each year. Wildhorse’s year-end was March 31. The company followed ASPE and chose to use the straight-line method of amortization for bond discounts or premiums.

Current Attempt in Progress On January 1, 2020, Wildhorse Corporation issued 11% bonds with a par value of $5,170,000, due in 10 years. The company incurred $195,000 in costs associated with the issuance of the bonds, which were capitalized. The bonds were issued at 102, and paid interest on January 1 and July 1 each year. Wildhorse's year-end was March 31. The company followed ASPE and chose to use the straight-line method of amortization for bond discounts or premiums. Your answer is partially correct. Prepare the journal entry to record the issue of the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit Jan. Cash 4923300 1 Bonds Payable 4923300 e Textbook and Media Assistance Used Your answer is partially correct. Prepare the entries required on March 31, 2020 to accrue interest and record any amortization required. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Credit Account Titles and Explanation Interest Expense Bonds Payable Interest Payable e Textbook and Media

Answer 1

Journal entry to record the issue of the bonds: Credit Date Account Titles and explanation 1-Jan Cash Bonds payable Debit $5,078,400 $5,078,400 Working note: $5,273,400 Gross proceeds from issue of bonds [$5,170,000 102/100] Less: Costs incurred Net proceeds from issue of bonds $195,000 $5,078,400 Journal entry to record the accrual interest and amortization: Credit Debit $144,465 Date Account Titles and explanation 31-Mar Interest expense Bond payable Interest payable [$5,170,000 ~ 11% x 3/12] $2,290 $142,175 Working note: Par value of bonds Less: Net proceeds from issue Discount on issue of bonds Amortization of bonds [$91,600/10 x3/12] $5,170,000 $5,078,4001 $91,600 $2,290

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