On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.
On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid
annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the
total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding
errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face
value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare a bond amortization schedule.
Changes During the Period
Ending Bond Liability Balances
Discount
Amortized
Interest
Expense
Discount on
Bonds
Payable
Carrying
Value
Period
Cash
Bonds
Ended
Paid
Payable
01/01/21
$
574,776
$
574,776
12/31/21
$
1,000
$
1,000
574,776
574,776
12/31/22
12/31/23
< Req 1
Req 2 to 5 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0e32c2cd-efee-443b-b49a-bf5303f9e097%2F3c5839e3-05d8-4bff-88f7-32ab4e17f7fc%2Frmnbujd_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2021, Loop Raceway issued 590 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid
annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 8 percent, so the
total proceeds from the bond issue were $574,776. Loop uses the straight-line bond amortization method and adjusts for any rounding
errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the interest and face
value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 99.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare a bond amortization schedule.
Changes During the Period
Ending Bond Liability Balances
Discount
Amortized
Interest
Expense
Discount on
Bonds
Payable
Carrying
Value
Period
Cash
Bonds
Ended
Paid
Payable
01/01/21
$
574,776
$
574,776
12/31/21
$
1,000
$
1,000
574,776
574,776
12/31/22
12/31/23
< Req 1
Req 2 to 5 >
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