Question

On January 1, 2017, Concord Company purchased 12% bonds having a maturity value of $390,000, for $419,567.77. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Concord Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, eg. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit DateAccount Titles and Explanation Credit Jan. 1, 2017 Debt Investments 419567.77 Cash 419567.77 eTextbook and Media List of Accounts Prepare a bond amortization schedule. (Round answers to 2 decimal places, eg. 2,525.25.) Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method Cash Received Interest Revenue Premiumm Amortized Carrying Amount of Bonds Date 46800 $ 46800 46800 46800 46800 46800 1/1/20 1/1/21 1/1/22 eTextbook and Media List of Accounts Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.(Round answers to 2 decimal places, eg. 2,525.25 Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Date Debit Credit Account Titles and Explanation Dec. 31,2017 Cash Debt Investments Interest Revenue eTextbook and Media List of Accounts Prepare the journal entry to record the interest revenue and the amortization at December 31,2018. (Round answers to 2 decimal places, eg. 2,525.25 Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit Date Account Titles and Explanation Dec. 31,2018 Debt Investments Cash Interest Revenue eTextbook and Media List of Accounts

Answer 1

Solution Schedule of Interest Revenue and Bond Premium Amortization Effective Interest Method Cash Received Premium Amortized Carrying Amount of Bonds Interest Date Revenue 419,567.77 414,724.55 409,397.01 403,536.71 397,090.38 390,000.00 46,800.00 46,800.00 46,800.00 46,800.00 46,800.00 41,956.78 41,472.46 40,939.70 40,353.67 39,709.62 4,843.22 5,327.54 5,860.30 6,446.33 7,090.38 1/1/21 Account Titles and Explanation Debit Credit Date Cash Dec 31, 2017 46,800.00 Debt Investments 4843.22 41956.78 Interest Revenue Account Titles and Explanation Credit Date Debit Cash Dec.31, 2018 46,800.00 Debt Investments 5,327.54 41472.46 Interest Revenue