Mitchell Inc. issued 60 of its 6%. $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. b. Prepare an amortization schedule for the first two years of the bond term. c. Prepare journal entries on the following dates. 1. January 1 of Year 1, bond issuance. 2. June 30 of Year 1, interest payment. 3. December 31 of Year 1, interest payment. Bond Selling Price Amortization Schedule Note: Round amounts in schedule to the nearest whole dollar. Note: Do not use negative signs. b. Date Jan 1, Year 1 Jun. 30. Year 1 S Dec. 31, Year 1$ Jun, 30. Year 2 S Dec. 31, Year 2 S Cash Interest Expense Premium Amortization 1.800 S 1,800 $ 1,800 S 1,800 ✓ S Journal Entries 1.566 $ 1,560 $ 1,577 x S 1,583 x S $ 234 S 240 S 223 x S 217 x S Bonds Payable, Net 62.626 ✓ 62.860 x 63.068 x 63.311 x 63094
Mitchell Inc. issued 60 of its 6%. $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. b. Prepare an amortization schedule for the first two years of the bond term. c. Prepare journal entries on the following dates. 1. January 1 of Year 1, bond issuance. 2. June 30 of Year 1, interest payment. 3. December 31 of Year 1, interest payment. Bond Selling Price Amortization Schedule Note: Round amounts in schedule to the nearest whole dollar. Note: Do not use negative signs. b. Date Jan 1, Year 1 Jun. 30. Year 1 S Dec. 31, Year 1$ Jun, 30. Year 2 S Dec. 31, Year 2 S Cash Interest Expense Premium Amortization 1.800 S 1,800 $ 1,800 S 1,800 ✓ S Journal Entries 1.566 $ 1,560 $ 1,577 x S 1,583 x S $ 234 S 240 S 223 x S 217 x S Bonds Payable, Net 62.626 ✓ 62.860 x 63.068 x 63.311 x 63094
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
ChapterMB: Model-building Problems
Section: Chapter Questions
Problem 13M
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A-6
![Mitchell Inc. issued 60 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to
amortize bond discounts or premiums.
Required
a. Determine the selling price of the bonds.
b. Prepare an amortization schedule for the first two years of the bond term.
c. Prepare journal entries on the following dates.
1. January 1 of Year 1, bond issuance.
2. June 30 of Year 1, interest payment.
3. December 31 of Year 1, interest payment.
Bond Selling Price
b.
Amortization Schedule
Note: Round amounts in schedule to the nearest whole dollar.
Note: Do not use negative signs.
Date
Jan 1, Year 1
Jun. 30, Year 1 $
Dec. 31, Year 1 $
Jun. 30, Year 2 $
Dec. 31, Year 2 $
Cash
Interest Expense Premium Amortization
1,800 $
1,800 $
$
1,800
1,800
Journal Entries
$
1,566 $
1,560 $
1,577 * $
1,583 x $
$
234 $
240✔ $
223 * $
217 * $
Bonds Payable, Net
62,626 ✔
62,860 *
63,088 x
63,311 X
63094](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5f101a1a-63c4-4d01-add6-ae471d18f075%2Fccbbd8aa-d087-4710-903e-a1990b7ebece%2F2v5s2q_processed.png&w=3840&q=75)
Transcribed Image Text:Mitchell Inc. issued 60 of its 6%, $1,000 bonds on January 1 of Year 1. The bonds pay cash interest semiannually each June 30 and December 31 and were issued to yield 5%. The bonds mature in five years on December 31, and the company uses the effective interest method to
amortize bond discounts or premiums.
Required
a. Determine the selling price of the bonds.
b. Prepare an amortization schedule for the first two years of the bond term.
c. Prepare journal entries on the following dates.
1. January 1 of Year 1, bond issuance.
2. June 30 of Year 1, interest payment.
3. December 31 of Year 1, interest payment.
Bond Selling Price
b.
Amortization Schedule
Note: Round amounts in schedule to the nearest whole dollar.
Note: Do not use negative signs.
Date
Jan 1, Year 1
Jun. 30, Year 1 $
Dec. 31, Year 1 $
Jun. 30, Year 2 $
Dec. 31, Year 2 $
Cash
Interest Expense Premium Amortization
1,800 $
1,800 $
$
1,800
1,800
Journal Entries
$
1,566 $
1,560 $
1,577 * $
1,583 x $
$
234 $
240✔ $
223 * $
217 * $
Bonds Payable, Net
62,626 ✔
62,860 *
63,088 x
63,311 X
63094
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