15 Devito & Co. issued bonds on January 1, 2018. At January 1, 2023 the balances are as follows: A int pay 1,200,000 cash 1,200,000 Interest payable Bonds Payable 8% Premium on bonds payable $1,200,000 $15,000,000 $480,000 B int exp 1,200,000 int pay 12,000,000 Interest is payable annually on January 1st. The bonds are callable on any annual interest date. Devito uses straight line amortization for any bond discount or premium. From January 1, 2023, the bonds will be outstanding for another 8 years Premium 60,000 int exp 60,000 C bp 4,500,000 cash 4,590,000 A) Journalize the payment of the bond interest on January 1, 2023 D) Prepare the journal entry at December 31, 2027, to amortize the bond discount and to accrue interest on the remaning bonds B) Prepare the entry to amortize the bond discount and to accrue the interest due on Decemebr 31, 2023 C) Assume that on January 1, 2027, after paying interest, Devito & Co. calls bonds having a face value of $4,500,000 The call price is 102. Record the redemption of the bonds Premium loss 72,000 18,000 int exp 840,000 int pay 840,000 Premium int exp 42,000 42,000
15 Devito & Co. issued bonds on January 1, 2018. At January 1, 2023 the balances are as follows: A int pay 1,200,000 cash 1,200,000 Interest payable Bonds Payable 8% Premium on bonds payable $1,200,000 $15,000,000 $480,000 B int exp 1,200,000 int pay 12,000,000 Interest is payable annually on January 1st. The bonds are callable on any annual interest date. Devito uses straight line amortization for any bond discount or premium. From January 1, 2023, the bonds will be outstanding for another 8 years Premium 60,000 int exp 60,000 C bp 4,500,000 cash 4,590,000 A) Journalize the payment of the bond interest on January 1, 2023 D) Prepare the journal entry at December 31, 2027, to amortize the bond discount and to accrue interest on the remaning bonds B) Prepare the entry to amortize the bond discount and to accrue the interest due on Decemebr 31, 2023 C) Assume that on January 1, 2027, after paying interest, Devito & Co. calls bonds having a face value of $4,500,000 The call price is 102. Record the redemption of the bonds Premium loss 72,000 18,000 int exp 840,000 int pay 840,000 Premium int exp 42,000 42,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:15 Devito & Co. issued bonds on January 1, 2018. At January 1, 2023 the balances are as follows:
A
int pay
1,200,000
cash
1,200,000
Interest payable
Bonds Payable 8%
Premium on bonds payable
$1,200,000
$15,000,000
$480,000
B
int exp
1,200,000
int pay
12,000,000
Interest is payable annually on January 1st. The bonds are callable on any annual interest date.
Devito uses straight line amortization for any bond discount or premium. From January 1, 2023,
the bonds will be outstanding for another 8 years
Premium
60,000
int exp
60,000
C
bp
4,500,000
cash
4,590,000
A) Journalize the payment of the bond interest on January 1, 2023
D) Prepare the journal entry at December 31, 2027, to amortize the bond discount and to accrue interest
on the remaning bonds
B) Prepare the entry to amortize the bond discount and to accrue the interest due on Decemebr 31, 2023
C) Assume that on January 1, 2027, after paying interest, Devito & Co. calls bonds having a face value of $4,500,000
The call price is 102. Record the redemption of the bonds
Premium
loss
72,000
18,000
int exp
840,000
int pay
840,000
Premium
int exp
42,000
42,000
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