On March 1, 2020, Mitchell Inc. issued 60, 6%, $1,000 bonds dated March 1, 2020 for $62,626. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 5%. The bonds mature February 28, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. The partial amortization schedule is as follows: Amortization Schedule Cash Effective Premium Outstanding Interest Interest amortization Balance 03/01/20 $62,626 1 08/31/20 $1,800 $1,566 ($234) 62,391 02/28/21 1,800 1,560 (240) 62,151 Required: Prepare journal entries on the following dates. Round to the nearest dollar. 1. March 1, 2020, bond issuance. 2. August 31, 2020, interest payment. 3. December 31, 2020, adjusting entry. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Insert Format Table

On March 1, 2020, Mitchell Inc. issued 60, 6%, $1,000 bonds dated March 1, 2020 for $62,626. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 5%. The bonds mature February 28, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. The partial amortization schedule is as follows: Amortization Schedule Cash Effective Premium Outstanding Interest Interest amortization Balance 03/01/20 $62,626 1 08/31/20 $1,800 $1,566 ($234) 62,391 02/28/21 1,800 1,560 (240) 62,151 Required: Prepare journal entries on the following dates. Round to the nearest dollar. 1. March 1, 2020, bond issuance. 2. August 31, 2020, interest payment. 3. December 31, 2020, adjusting entry. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Insert Format Table

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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