On January 1, 2021, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 6 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 5.50 percent, so the total proceeds from the bond issue were $101,347. Methodical uses the effective-interest 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 entry to record the bond issue, interest payments on December 31, 2021 and 2022, 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 103. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Premium Amortized equaling Premium on Bonds Payable.) Period Ended 01/01/21 12/31/21 12/31/22 12/31/23 Changes During the Period Cash Paid Interest Expense Premium Amortized $ Raq 1 0 0 0 Ending Bond Liability Balances Premium on Bonds Payable Bonds Payable Req 2 to 5 > Carrying Value S 0 0 0 0
On January 1, 2021, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 6 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 5.50 percent, so the total proceeds from the bond issue were $101,347. Methodical uses the effective-interest 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 entry to record the bond issue, interest payments on December 31, 2021 and 2022, 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 103. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Premium Amortized equaling Premium on Bonds Payable.) Period Ended 01/01/21 12/31/21 12/31/22 12/31/23 Changes During the Period Cash Paid Interest Expense Premium Amortized $ Raq 1 0 0 0 Ending Bond Liability Balances Premium on Bonds Payable Bonds Payable Req 2 to 5 > Carrying Value S 0 0 0 0
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Transcribed Image Text:On January 1, 2021, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 6 percent
paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 5.50
percent, so the total proceeds from the bond issue were $101,347. Methodical uses the effective-interest 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 entry to record the bond issue, interest payments on December 31, 2021 and 2022, 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 103.
Complete this question by entering your answers in the tabs below.
Req 2 to 5
Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face
value of the bond in the last period. Interest expense in the last period will result in the amount in Premium Amortized equaling
Premium on Bonds Payable.)
Req 1
Period
Ended
01/01/21
12/31/21
12/31/22
12/31/23
Changes During the Period
Cash Paid
Interest
Expense
Premium
Amortized
$
8
<Roq 1
0
0
0
Ending Bond Liability Balances
Premium on
Bonds Payable
Bonds Payable
Req 2 to 5 >
Carrying Value
$
0
0
0
0
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