Question

SSIGNMENT RESOURCES Problem 14-5 In each of the following independent cases, the company closes its books on December 3:. Exerciss - a Exercise 14-2 on March 1, 2017. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2020. Th yield 12%. 図Problem 14-1 Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization Amortize premium or discount on interest date year-end. (Round answers to O decimal places, e.g. 38, 548.) E Exercise 14-12 Schedule of Bond Discount Method Bonds Sold to Yield Review Score Review Results by Study Objective Interest Expense Carrying Amount of Bonds Cash Paid Discount Amortized Date 3/1/20 9/1/20

Answer 1

Post the second question separately.

Maturity period = 3.5 years
Semiannual interest = $497000 x 4% = $19880
Semiannual yield = 6%
total number of semiannual period = 3.5 x 2 = 7
Issue price of the bond
$19880 * PVIFA(6%, 7) + $497000 * PVIF (6%, 7)
$19880 * 5.5824+ $497000 * 0.6651
$441,533
Discount on issue of bond = $497000 - $441533 =$55467
Amortization schedule (effective interest method)
Date	Interest Payment @ 4%	Interest Expense @ 6%	Amortization of bond discount	debit Balance in the Bond discount Account	Credit Balance in the bonds Payable Account	Book value/Carrying Value of the bond
	$	$	$	$	$	$
3/1/2017				55467	497000	441533
9/1/2017	19880	26491.98	6611.98	48855.02	497000	448144.98
3-01-2018	19880	26888.70	7008.70	41846.32	497000	455153.68
9/1/2018	19880	27309.22	7429.22	34417.10	497000	462582.90
3-01-2019	19880	27754.97	7874.97	26542.13	497000	470457.87
9/1/2019	19880	28227.47	8347.47	18194.65	497000	478805.35
3-01-2020	19880	28728.32	8848.32	9346.33	497000	487653.67
9/1/2020	19880	29259.22	9379.22	0	497000	497000
	Journal Entry to record the issuance of bonds
Date	General Journal	Dr	Cr
3/1/2017	Cash	$441,533
	Discount on Bonds	$55,467
	Bonds Payable		$497,000
	Journal Entry to record payment of interest and discount amortization
9/1/2017	Interest Expense	$26,491
	Discount on Bonds Payable		$6,611
	Cash		$19,880
3/1/2018	Interest Expense	$26,888
	Discount on Bonds Payable		$7,008
	Cash		$19,880
9/1/2018	Interest Expense	$27,309
	Discount on Bonds Payable		$7,429
	Cash		$19,880
3/1/2019	Interest Expense	$27,754
	Discount on Bonds Payable		$7,874
	Cash		$19,880
9/1/2019	Interest Expense	$28,227
	Discount on Bonds Payable		$8,347
	Cash		$19,880
3/1/2020	Interest Expense	$28,728
	Discount on Bonds Payable		$8,848
	Cash		$19,880
9/1/2020	Interest Expense	$29,259
	Discount on Bonds Payable		$9,379
	Cash		$19,880