On January 1, Year 1, Young Company issued bonds with a face value of $108,000, a stated rate of interest of 10 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $114,931. Young used the effective interest rate method to amortize the bond premium. Required a. Determine the amount of the premium on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. c. Determine the carrying value of the bond liability on December 31, Year 1. d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense. Complete this question by entering your answers in the tabs below. Req A to C Provide the general journal entry necessary to record the December 31, Year 1, interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount.) Req D View transaction list Journal entry worksheet 1 Record the interest expense. Note: Enter debits before credits. Date Year 1 General Journal Interest expense Bond premium Cash Debit 10,344 Credit 456 >
On January 1, Year 1, Young Company issued bonds with a face value of $108,000, a stated rate of interest of 10 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $114,931. Young used the effective interest rate method to amortize the bond premium. Required a. Determine the amount of the premium on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. c. Determine the carrying value of the bond liability on December 31, Year 1. d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense. Complete this question by entering your answers in the tabs below. Req A to C Provide the general journal entry necessary to record the December 31, Year 1, interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount.) Req D View transaction list Journal entry worksheet 1 Record the interest expense. Note: Enter debits before credits. Date Year 1 General Journal Interest expense Bond premium Cash Debit 10,344 Credit 456 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please answer all the subparts and please don't give image based answer..thanku
Transcribed Image Text:On January 1, Year 1, Young Company issued bonds with a face value of $108,000, a stated rate of interest of 10 percent, and a 10-year
term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the
bonds were issued. The bonds sold for $114,931. Young used the effective interest rate method to amortize the bond premium.
Required
a. Determine the amount of the premium on the day of issue.
b. Determine the amount of interest expense recognized on December 31, Year 1.
c. Determine the carrying value of the bond liability on December 31, Year 1.
d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense.
Complete this question by entering your answers in the tabs below.
Req A to C
Provide the general journal entry necessary to record the December 31, Year 1, interest expense. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount.)
Req D
View transaction list
Journal entry worksheet
1
Record the interest expense.
Note: Enter debits before credits.
Date
Year 1
General Journal
Interest expense
Bond premium
Cash
Debit
10,344
Credit
456
>
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