On January 1, 2020, Marigold Company sold 12% bonds having a maturity value of $ 400,000 for $ 430,326, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Marigold Company allocates interest and unamortized discount or premium on the effective-interest basis. (a)
On January 1, 2020, Marigold Company sold 12% bonds having a maturity value of $ 400,000 for $ 430,326, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Marigold Company allocates interest and unamortized discount or premium on the effective-interest basis. (a)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2020, Marigold Company sold 12% bonds having a maturity value of $ 400,000 for $ 430,326, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Marigold Company allocates interest and unamortized discount or premium on the effective-interest basis.
(a)
Correct answer icon
Your answer is correct.
Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. 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.)
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Date
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Account Titles and Explanation
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Debit
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Credit
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January 1, 2020
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(b)
Prepare a schedule of interest expense and bond amortization for 2020–2022. (Round answer to 0 decimal places, e.g. 38,548.)
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Schedule of Interest Expense and Bond Premium Amortization
Effective-Interest Method |
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Date |
Cash
Paid |
Interest
Expense |
Premium
Amortized |
Carrying
Amount of Bonds |
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| 1/1/20 | $ | $ | $ | $ | ||||
| 12/31/20 | ||||||||
| 12/31/21 | ||||||||
| 12/31/22 |
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(c)
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