On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,889.65 minus bond issue costs of $3,000. The bonds carry a stated rate of interest of 10% payable annually on December 31 and were issued to yield 9%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight- line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds.

On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,889.65 minus bond issue costs of $3,000. The bonds carry a stated rate of interest of 10% payable annually on December 31 and were issued to yield 9%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight- line method to amortize the debt issuance costs. Required: Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, debt issuance cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...

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