Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 8%. On October 1, 2018, Ivanhoe buys back $118,800 worth of bonds for $125,800 (includes accrued interest). Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.) Schedule of Bond Discount AmortizationEffective-Interest MethodBonds Sold to Yield Date CashPaid InterestExpense DiscountAmortizedCarryingAmount ofBonds6/1/17 $$$$12/1/17 6/1/18 12/1/18 6/1/19 12/1/19 6/1/20 12/1/20 6/1/21 * Difference due to rounding Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) DateAccount Titles and ExplanationDebitCredit6/1/17 12/1/17 12/31/17 6/1/18 10/1/18 (To record interest expense and premium amortization)10/1/18 (To record buy back of bonds)12/1/18 12/31/18 6/1/19 12/1/19
Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 8%. On October 1, 2018, Ivanhoe buys back $118,800 worth of bonds for $125,800 (includes accrued interest).
Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to 0 decimal places, e.g. 38,548.)
Schedule of Bond Discount Amortization
Effective-Interest Method
Bonds Sold to Yield
Date
Cash
Paid
Interest
Expense
Discount
Amortized
Carrying
Amount of
Bonds
6/1/17 $
$
$
$
12/1/17
6/1/18
12/1/18
6/1/19
12/1/19
6/1/20
12/1/20
6/1/21
* Difference due to rounding
Prepare all of the relevant
Date
Account Titles and Explanation
Debit
Credit
6/1/17
12/1/17
12/31/17
6/1/18
10/1/18
(To record interest expense and premium amortization)
10/1/18
(To record buy back of bonds)
12/1/18
12/31/18
6/1/19
12/1/19
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
