On January 1, 2019, Gates Corporation issued $200,000 of 5-year bonds due December 31, 2023, for $207,779.30 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 $200,000 of 5-year bonds due December 31, 2023, for $207,779.30 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2019, Gates Corporation issued $200,000 of 5-year bonds due December 31, 2023, for $207,779.30 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.
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