Solution
David answered on
Dec 26 2021
1. If a 7%, 10-year, $800,000 bond is issued at face value and interest is paid annually, what is the
amount of the interest payment at the end of the first year period? 7%*$800,000=$56,000
2. If the Bonds Payable account has a balance of $900,000 and the Discount on Bonds Payable account
has a balance of $120,000, what is the ca
ying value of the bonds? 900,000-120,000=$780,000
3. Randle Inc. issues $310,000, 10-year, 8% bonds at 98. Prepare the journal entry to record the sale of
these bonds on March 1, 2017.
Date Details /account Debit Credit
1/3/17 Cash 303,800
Discount on bond payable 6,200
Bond payable 310,000
4. Price Company issues $350,000, 20-year, 8% bonds at 101. Prepare the journal entry to record the
sale of these bonds on June 1, 2017.
Date Details /account Debit Credit
1/3/17 Cash 353,500
Premium on bond payable 3,500
Bond payable 350,000
5. Sweetwood Company issues $4,000,000, 10-year, 8% bonds at 95, with interest payable annually on
January 1. The straight-line method is used to amortize bond discount.
Date Details /account Debit Credit
1/3/17 Cash 3,800,000
Discount on bond payable 200,000
Bond payable 4,000,000
Date Details /account Debit Credit
31/12 Interest expense 340,000
Discount on bond payable 20,000
Interest payable 320,000
6. On January 1, 2017, Klosterman Company issued $560,000, 14%, 10-year bonds at face value. Interest
is payable annually on January 1.
Date Details /account Debit Credit
1/1/17 Cash 560,000
Bond payable 560,000
Date Details /account Debit Credit
31/12/17 Interest expense 78,400
Interest payable 78,400
Date Details /account Debit Credit
1/1 Interest expense ...