10) Given the following Bond Amortization Table, answer the multiple choice question below the Table. Interest Unamortized DATE PMT Expense Amortization Amortization Carrying Value 1/1/2018 6/30/2018 $ 28,000 $ 12/31/2018 $ 28,000 $ 45,242 $ 654,758 32,738 $ 32,975 $ 4,738 $ 40,505 $ 659,495 35,530 $ 30,306 $ 4,975 $ 664,470 6/30/2019 $ 28,000 $ 33,224 $ 5,224 $ 5,485 $ 669,694 12/31/2019 $ 28,000 $ 6/30/2020 $ 28,000 $ 12/31/2020 $ 28,000 $ 33,485 $ 24,822 $ 675,178 33,759 $ 5,759 $ 19,063 $ 680,937 6,047 $ 6,349 $ 34,047 $ 13,016 $ 686,984 34,349 $ 34,667 $ 6,667 $ 0.00 $ 6/30/2021 $ 28,000 $ 693,333 12/31/2021 $ 28,000 $ 6,667 $ 700,000 Question: If this bond were retired on January 1, 2021 at $690,000, then the journal entry on January 1, 2021 would show: A. Credit to Discount on Bond Payable in the amount of $3,016 B. Debit to Discount on Bond Payable in the amount of $3,016 C. Gain in the amount of $3,016 D. Loss in the amount of $3,016
10) Given the following Bond Amortization Table, answer the multiple choice question below the Table. Interest Unamortized DATE PMT Expense Amortization Amortization Carrying Value 1/1/2018 6/30/2018 $ 28,000 $ 12/31/2018 $ 28,000 $ 45,242 $ 654,758 32,738 $ 32,975 $ 4,738 $ 40,505 $ 659,495 35,530 $ 30,306 $ 4,975 $ 664,470 6/30/2019 $ 28,000 $ 33,224 $ 5,224 $ 5,485 $ 669,694 12/31/2019 $ 28,000 $ 6/30/2020 $ 28,000 $ 12/31/2020 $ 28,000 $ 33,485 $ 24,822 $ 675,178 33,759 $ 5,759 $ 19,063 $ 680,937 6,047 $ 6,349 $ 34,047 $ 13,016 $ 686,984 34,349 $ 34,667 $ 6,667 $ 0.00 $ 6/30/2021 $ 28,000 $ 693,333 12/31/2021 $ 28,000 $ 6,667 $ 700,000 Question: If this bond were retired on January 1, 2021 at $690,000, then the journal entry on January 1, 2021 would show: A. Credit to Discount on Bond Payable in the amount of $3,016 B. Debit to Discount on Bond Payable in the amount of $3,016 C. Gain in the amount of $3,016 D. Loss in the amount of $3,016
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 95PSA
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Amortized bond is that bond in which payment is made towards both interest and principal. To compute percentage of interest and principal amortization schedule is prepared.
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