Compute the following: 1. The adjusted balance of bonds payable as of December 31, 2020 2. The adjusted balance of the bond discount on December 31, 2020 3. The bond interest expense for the year 2020
In your audit of Maximillian Company, you find the following ledger account balances:
12% Bonds payable - Due 10 years from 1/1/2017
1/2/2017
CR
5,000,000
Bonds Payable Redeemed
10/1/2020
CD
1,110,000
Discount on Bonds Payable
1/2/2017
CR
529,697
Bond Interest Expense
1/1/2020
CD
300,000
7/1/2020
CD
300,000
The bonds were redeemed for permanent cancellation on October 1, 2020 at 108 plus accrued interest. Based on your computation, the bonds were originally issued to yield 14%.
QUESTIONS: Compute the following:
1. The adjusted balance of bonds payable as of December 31, 2020
2. The adjusted balance of the bond discount on December 31, 2020
3. The bond interest expense for the year 2020
4. The loss on bond redemption
5. The balance of interest payable on December 31, 2020
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
