Question

On January 1, 2018, Loop Raceway issued 520 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue were $506,090. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year Required: 1. Prepare a bond amortization schedule 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 98 Complete this question by entering your answers in the tabs below. Req 2 to5 Req 1 Prepare a bond amortization schedule Changes During the Period Ending Bond Liability Balances Discount on Bonds Payable Period Ended Cash Paid Carrying Value Discount Amortized Expense Interest Bonds Payable 01/01/18 12/31/18 12/31/19 12/31/20 Req1 Req 2 to 5 >

• 1

  Record the issuance of 520 bonds at face value of $1,000 each for $506,090.

• 2

  Record the interest payment on December 31, 2018.

• 3

  Record the interest payment on December 31, 2019.

• 4

  Record the interest and face value payment on December 31, 2020.

• 5

  Record the retirement of the bonds at a quoted price of 98, assuming the bonds are retired on January 1, 2020.

General journal entry options:

• No Journal Entry Required
• Accounts Payable
• Accounts Receivable
• Accumulated Amortization
• Accumulated Depreciation—Buildings
• Accumulated Depreciation—Equipment
• Accumulated Depreciation—Vehicles
• Accumulated Other Comprehensive Income
• Additional Paid-In Capital, Common Stock
• Additional Paid-In Capital, Preferred Stock
• Additional Paid-In Capital, Treasury Stock
• Advertising Expense
• Allowance for Doubtful Accounts
• Amortization Expense
• Bad Debt Expense
• Bonds Payable
• Buildings
• Cash
• Cash Equivalents
• Cash Overage
• Cash Shortage
• Charitable Contributions Payable
• Common Stock
• Copyrights
• Cost of Goods Sold
• Deferred Revenue
• Delivery Expense
• Depreciation Expense
• Discount on Bonds Payable
• Dividends
• Dividends Payable
• Donation Revenue
• Equipment
• FICA Payable
• Franchise Rights
• Gain on Bond Retirement
• Gain on Disposal of PPE
• Goodwill
• Impairment Loss
• Income Tax Expense
• Income Tax Payable
• Insurance Expense
• Interest Expense
• Interest Payable
• Interest Receivable
• Interest Revenue
• Inventories
• Inventory - Estimated Returns
• Land
• Legal Expense
• Licensing Rights
• Logo and Trademarks
• Loss on Bond Retirement
• Loss on Disposal of PPE
• Natural Resource Assets
• Notes Payable (long-term)
• Notes Payable (short-term)
• Notes Receivable (long-term)
• Notes Receivable (short-term)
• Office Expenses
• Other Current Assets
• Other Noncurrent Assets
• Other Noncurrent Liabilities
• Other Operating Expenses
• Other Revenue
• Patents
• Payroll Tax Expense
• Petty Cash
• Preferred Stock
• Premium on Bonds Payable
• Prepaid Advertising
• Prepaid Insurance
• Prepaid Rent
• Refund Liability
• Rent Expense
• Rent Revenue
• Repairs and Maintenance Expense
• Restricted Cash (long-term)
• Restricted Cash (short-term)
• Retained Earnings
• Salaries and Wages Expense
• Salaries and Wages Payable
• Sales Revenue
• Sales Tax Payable
• Service Revenue
• Short-term Investments
• Software
• Subscription Revenue
• Supplies
• Supplies Expense
• Travel Expense
• Treasury Stock
• Unemployment Tax Payable
• Utilities Expense
• Vehicles
• Withheld Income Taxes Payable

Answer 1

Cash to be Paid @5% on Face Value Amortization Interest Expense Bonds Paya Discounton Carry-value (4) Bonds Payable 15 Date 16 17 18 31-Dec 19 31-Dec 20 31-Dec 21 22 Date 23 2018 24 1-Jan Cash 25 26 27 28 29 31-Dec Interest expense 30 31 32 13,910 9,273 4,637 1-Jan 506,090 510,727 515,363 520,000 4,637 4,637 4,637 30,637 30,637 30,637 26,000 26,000 26,000 520,000 520,000 520,000 Account Titles & Explanation Debit Credit 506,090 13,910 Discount on Bonds payable Bonds Payable to record issue of Bonds) 520,000 30,637 4,637 26,000 Discount on Bonds Payable Cash To record payment of Interest) 34 35 31-Dec Interest expense 36 37 38 2019 30,637 4,637 26,000 Discount on Bonds Payable Cash To record payment of Interest)

40 41 1-Jan Bonds Payable (520000* 98/100) 42 43 2020 4,637 509,600 5,763 Discount on Bonds Payable Cash(520000*98/100) Gain on Bond Retirement To record retirement of bonds) 45 46 47 48 49 50 51 Note; As there are 3 different questions I have answered your first question.