On January 1, when the market interest rate was 9 percent, Selton Corporation completed a $200,000, 8 percent bond issue for $187.163. The bonds were dated January 1. pay interest each December 31, and mature in ten years. Selton amortizes the bond discount using the straight-line method. Assume Selton Corporation uses the effective-interest method to amortize the bond discount. Requlred: 1. Prepare the journal entry to record the bond issuance. (If no entry Is requlred for a transactlon/event, select "No Journal entry requlred" In the first account fleld.)
On January 1, when the market interest rate was 9 percent, Selton Corporation completed a $200,000, 8 percent bond issue for $187.163. The bonds were dated January 1. pay interest each December 31, and mature in ten years. Selton amortizes the bond discount using the straight-line method. Assume Selton Corporation uses the effective-interest method to amortize the bond discount. Requlred: 1. Prepare the journal entry to record the bond issuance. (If no entry Is requlred for a transactlon/event, select "No Journal entry requlred" In the first account fleld.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1. when the market interest rate was 9 percent, Selton Corporation completed a $200,000, 8 percent bond issue for
$187.163. The bonds were dated January 1. pay interest each December 31, and mature in ten years. Selton amortizes the bond
discount using the straight-line method. Assume Selton Corporation uses the effective-interest method to amortize the bond discount.
Required:
1. Prepare the journal entry to record the bond issuance. (If no entry Is requlred for a transection/event, select "No Journal entry
requlred" In the first account fleld.)
View transaction list
Journal entry worksheet
1.
Record the issuance of bonds.
Note: Enter debits before credits,
Date
General Journal
Debit
Credit
January 01
Cash
187,163
Discount on bonds payable
12,837
Bonds payable
200,000
Record entry
Clear entry
View general journal
Transcribed Image Text:2. Prepare the journal entry to record the interest payment on December 31. (If no entry Is required for a transactlon/event, select
"No Journal entry requlred" In the first occount fleld. Round your answers to the nearest dollar amount.)
View transaction list
Journal entry worksheet
Record the interest payment on December 31.
Nete: Enter debits befere credits.
Date
General Journal
Debit
Credit
December 31
Interest expense
Discount on bonds payable
Cash
16,000
Record entry
Clear entry
View general journal
3. Prepare a bond discount amortization schedule for these bonds. (Round your answers to the nearest doller amount.)
Changes During the Period
Ending Bond Liability Balances
Period
Ended
Interest
Expense
Cash
Paid
Interest Bonds
Expense Payable
Discount on
Bonds
Payable
Carrying
Value
Start
Yr 1 End
Yr 2 End
Yr 3 End
Yr 4 End
Yr 5 End
Yr 6 End
Yr7 End
Yr 8 End
Yr 9 End
Yr 10 End
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