On 1/1/20X1, ini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000. Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A]. Project 2.1 Part 1 Journal Entries Date 1/1/20X1 Account Name (Debit) Account Name (Credit) Debit Credit Cash [A] 6/30/20X1 Interest expense Premium on bonds 12/31/20X1 Interest expense Premium on bonds 6/30/20X2 Interest expense Premium on bonds 6/30/20X2 Bonds payable Premium on bonds Bonds payable Premium on bonds Cash Cash Cash Cash Cash Gain [E] [F] [H] [1] [K] [L] [N] [0] [B] [C] [D] [G] 5 [J] [M] [P] [Q]
On 1/1/20X1, ini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000. Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A]. Project 2.1 Part 1 Journal Entries Date 1/1/20X1 Account Name (Debit) Account Name (Credit) Debit Credit Cash [A] 6/30/20X1 Interest expense Premium on bonds 12/31/20X1 Interest expense Premium on bonds 6/30/20X2 Interest expense Premium on bonds 6/30/20X2 Bonds payable Premium on bonds Bonds payable Premium on bonds Cash Cash Cash Cash Cash Gain [E] [F] [H] [1] [K] [L] [N] [0] [B] [C] [D] [G] 5 [J] [M] [P] [Q]
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![On 1/1/20X1, Illini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total
of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000.
Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A].
Project 2.1 Part 1 Journal Entries
Date
1/1/20X1
Account Name (Debit) Account Name (Credit) Debit Credit
Cash
[A]
6/30/20X1 Interest expense
Premium on bonds
12/31/20X1 Interest expense
Premium on bonds.
6/30/20X2 Interest expense
Premium on bonds
6/30/20X2 Bonds payable
Premium on bonds
Bonds payable
Premium on bonds
Cash
Cash
Cash
Cash
Cash
Gain
[E]
[F]
[H]
[U]
[K]
[L]
[N]
[0]
[B]
[C]
[D]
[G]
5
[J]
[M]
[P]
[Q]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b0eb601-e287-43a5-bef7-a3d989803af0%2Ffc1871f4-09c5-4adf-be9c-fa5c884dda22%2Fj09dq4n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On 1/1/20X1, Illini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total
of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000.
Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A].
Project 2.1 Part 1 Journal Entries
Date
1/1/20X1
Account Name (Debit) Account Name (Credit) Debit Credit
Cash
[A]
6/30/20X1 Interest expense
Premium on bonds
12/31/20X1 Interest expense
Premium on bonds.
6/30/20X2 Interest expense
Premium on bonds
6/30/20X2 Bonds payable
Premium on bonds
Bonds payable
Premium on bonds
Cash
Cash
Cash
Cash
Cash
Gain
[E]
[F]
[H]
[U]
[K]
[L]
[N]
[0]
[B]
[C]
[D]
[G]
5
[J]
[M]
[P]
[Q]
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