Entries for Bonds Payable, including bond redemptionThe following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:Year 1 July 1.Issued $4,530,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $4,359,272. Interest is payable semiannually on December 31 and June 30.Dec. 31.Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.Dec. 31.Closed the interest expense account.Year 2 June 30.Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.Dec. 31.Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.Dec. 31.Closed the interest expense account.Year 3 June 30.Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $102,436 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) Required:1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar.DateAccountDebitCreditYear 1July 1Dec. 31-BondDec. 31-ClosingYear 2June 30 Dec. 31-BondDec. 31-ClosingYear 3June 302. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.a. Year 12$b. Year 22$3. Determine the carrying amount of the bonds as of December 31, Year 2.

Bonds Bonds are referred to as the fixed-income instrument which represents a loan made by an…

Answered: Entries for Bonds Payable, including…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for Bonds Payable, including bond redemption

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $4,530,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $4,359,272. Interest is payable semiannually on December 31 and June 30.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.	Closed the interest expense account.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $17,073 is combined with the semiannual interest payment.
Dec. 31.	Closed the interest expense account.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $102,436 after payment of interest and amortization of discount have been recorded. (Record the redemption only.)

Required:
1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar.
Date
Account
Debit
Credit
Year 1
July 1
Dec. 31-Bond
Dec. 31-Closing
Year 2
June 30

Dec. 31-Bond
Dec. 31-Closing
Year 3
June 30
2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.
a. Year 1
2$
b. Year 2
2$
3. Determine the carrying amount of the bonds as of December 31, Year 2.

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