COTB Problem 10-7 (Algo) (Supplement 10A) Recording Bond Issue, Interest Payments (Straight-Line Amortization), and Early Bond Retirement [LO 10-S1] On January 1, Year 1, a company issued 100 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, Year 3. On the issue date, the market interest rate was 2.10 percent, so the total proceeds from the bond issue were $102,595. The company uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the required journal entries to record the bond issue, interest payments on December 31, Year 1 and Year 2, the interest and face value payment on December 31, Year 3 and the bond retirement. Assume the bonds are retired early on January 1, Year 3 instead of at their maturity date of December 31, Year 3, record the entry to retire the bonds early assuming a price of 102. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare a bond amortization schedule. Note: Round your answers to the nearest whole dollar. Make sure that the carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable. Journal Entry Components Period Ended Cash Paid Amortized Premium Interest Expense Bonds Payable Balance Sheet Accounts Premium on Bonds Payable Carrying Value January 01, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 < Req 1 Req 2 to 5 >
COTB Problem 10-7 (Algo) (Supplement 10A) Recording Bond Issue, Interest Payments (Straight-Line Amortization), and Early Bond Retirement [LO 10-S1] On January 1, Year 1, a company issued 100 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, Year 3. On the issue date, the market interest rate was 2.10 percent, so the total proceeds from the bond issue were $102,595. The company uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the required journal entries to record the bond issue, interest payments on December 31, Year 1 and Year 2, the interest and face value payment on December 31, Year 3 and the bond retirement. Assume the bonds are retired early on January 1, Year 3 instead of at their maturity date of December 31, Year 3, record the entry to retire the bonds early assuming a price of 102. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare a bond amortization schedule. Note: Round your answers to the nearest whole dollar. Make sure that the carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable. Journal Entry Components Period Ended Cash Paid Amortized Premium Interest Expense Bonds Payable Balance Sheet Accounts Premium on Bonds Payable Carrying Value January 01, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 < Req 1 Req 2 to 5 >
Cornerstones of Financial Accounting
4th Edition
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Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
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Problem 68E: Exercise Bonds with Annual Interest Payments Kiwi Corporation issued at par $350,000, 9% bonds on...
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![COTB Problem 10-7 (Algo) (Supplement 10A) Recording Bond Issue, Interest Payments (Straight-Line
Amortization), and Early Bond Retirement [LO 10-S1]
On January 1, Year 1, a company issued 100 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually
on December 31, and a maturity date of December 31, Year 3. On the issue date, the market interest rate was 2.10 percent, so the total
proceeds from the bond issue were $102,595. The company uses the straight-line bond amortization method and adjusts for any
rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the required journal entries to record the bond issue, interest payments on December 31, Year 1 and Year 2, the interest
and face value payment on December 31, Year 3 and the bond retirement. Assume the bonds are retired early on January 1, Year 3
instead of at their maturity date of December 31, Year 3, record the entry to retire the bonds early assuming a price of 102.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare a bond amortization schedule.
Note: Round your answers to the nearest whole dollar. Make sure that the carrying value equals face value of the bond in the last period.
Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable.
Journal Entry Components
Period Ended
Cash
Paid
Amortized
Premium
Interest
Expense
Bonds
Payable
Balance Sheet Accounts
Premium on
Bonds
Payable
Carrying
Value
January 01, Year 1
December 31, Year 1
December 31, Year 2
December 31, Year 3
< Req 1
Req 2 to 5 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b2c6705-90a4-4fe6-953a-cea8f35dfa3c%2Fb5502e7d-0e97-416d-9c72-1be0adb04cbf%2Fn9ew24_processed.jpeg&w=3840&q=75)
Transcribed Image Text:COTB Problem 10-7 (Algo) (Supplement 10A) Recording Bond Issue, Interest Payments (Straight-Line
Amortization), and Early Bond Retirement [LO 10-S1]
On January 1, Year 1, a company issued 100 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually
on December 31, and a maturity date of December 31, Year 3. On the issue date, the market interest rate was 2.10 percent, so the total
proceeds from the bond issue were $102,595. The company uses the straight-line bond amortization method and adjusts for any
rounding errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the required journal entries to record the bond issue, interest payments on December 31, Year 1 and Year 2, the interest
and face value payment on December 31, Year 3 and the bond retirement. Assume the bonds are retired early on January 1, Year 3
instead of at their maturity date of December 31, Year 3, record the entry to retire the bonds early assuming a price of 102.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare a bond amortization schedule.
Note: Round your answers to the nearest whole dollar. Make sure that the carrying value equals face value of the bond in the last period.
Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable.
Journal Entry Components
Period Ended
Cash
Paid
Amortized
Premium
Interest
Expense
Bonds
Payable
Balance Sheet Accounts
Premium on
Bonds
Payable
Carrying
Value
January 01, Year 1
December 31, Year 1
December 31, Year 2
December 31, Year 3
< Req 1
Req 2 to 5 >
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