ou are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s journal entries, shown as follows: Journal Entries, Year 1 Journal Date Description Debit Credit Jan. 1 Cash 1,004,720 Premium on Bonds Payable 58,720 Bonds Payable 946,000 Jun. 30 Interest Expense 18,349 Premium on Bonds Payable 2,936 Cash 21,285 Jul. 1 Cash 1,921,280 Discount on Bonds Payable 78,720 Bonds Payable 2,000,000 Dec. 31 Interest Expense 18,349 Premium on Bonds Payable 2,936 Cash 21,285 31 Interest Expense 41,560 Discount on Bonds Payable 6,560 Cash 35,000 31 Retained Earnings 78,258 Interest Expense 78,258 Bonds Payable Review the journal entries on the SpringFit Corporation panel, then answer the following questions. 5. Which entry shows bonds that sold for more than their face amount? Choose the date. Jan. 1 6. How much interest was paid during the year on the bonds in question (5)? $ 8. What is the carrying value of the bonds in question (5) at the end of the year?

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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Question

You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous year’s journal entries, shown as follows:

Journal Entries, Year 1

Journal
Date	Description	Debit	Credit
Jan. 1	Cash	1,004,720
	Premium on Bonds Payable		58,720
	Bonds Payable		946,000

Jun. 30	Interest Expense	18,349
	Premium on Bonds Payable	2,936
	Cash		21,285

Jul. 1	Cash	1,921,280
	Discount on Bonds Payable	78,720
	Bonds Payable		2,000,000

Dec. 31	Interest Expense	18,349
	Premium on Bonds Payable	2,936
	Cash		21,285

31	Interest Expense	41,560
	Discount on Bonds Payable		6,560
	Cash		35,000

31	Retained Earnings	78,258
	Interest Expense		78,258

Bonds Payable

Review the journal entries on the SpringFit Corporation panel, then answer the following questions.

5. Which entry shows bonds that sold for more than their face amount? Choose the date.

Jan. 1

6. How much interest was paid during the year on the bonds in question (5)?

8. What is the carrying value of the bonds in question (5) at the end of the year?

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