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Prepare the journal entry at the date of the bond issuance. (Roun

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

On January 1, 2025, Culver Company sold 12% bonds having a maturity value of $350,000.00 for $376,535.48, which provides the
bondholders with a 10% yield. The bonds are dated January 1, 2025, and mature January 1, 2030, with interest payable December 31
of each year. Culver Company allocates interest and unamortized discount or premium on the effective-interest basis.
Click here to view factor tables.
(a)
Your answer is partially correct.
Prepare the journal entry at the date of the bond issuance. (Round answer to 2 decimal places, e.g. 38,548.25. If no entry is required,
select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is
entered. Do not indent manually. List all debit entries before credit entries.)
Date
January
1, 2025
Account Titles and Explanation
Cash
Premium on Bonds Payable
Interest Expense
Debit
350000
26535.48
Credit
376535.48

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Follow-up Question

Prepare a schedule of interest expense and bond amortization for 2025-2027. (Round answer to 2 decimal places, e.g. 38,548.25.)
Date
1/1/25 $
12/31/25
12/31/26
12/31/27
Cash
Paid
Schedule of Interest Expense and Bond Premium Amortization
Effective-Interest Method
$
Interest
Expense
$
Premium
Amortized
$
Carry
Value of

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