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Question 23

Question 23

FINANCIAL ACCOUNTING
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 23
### Dobbs Company Bond Issuance and Amortization **Scenario:** Dobbs Company issues 5%, two-year bonds on December 31, 2021, with a par value of $200,000 and semiannual interest payments. #### Straight-Line Bond Amortization Table | Semiannual Period-End | Unamortized Discount | Carrying Value | |-----------------------|----------------------|----------------| | (0) 12/31/2021 | $12,000 | $188,000 | | (1) 6/30/2022 | 9,000 | 191,000 | | (2) 12/31/2022 | 6,000 | 194,000 | | (3) 6/30/2023 | 3,000 | 197,000 | | (4) 12/31/2023 | 0 | 200,000 | #### Instructions: Use the above straight-line bond amortization table and prepare journal entries for the following: 1. **The issuance of bonds on December 31, 2021.** 2. **The first through fourth interest payments on each June 30 and December 31.** 3. **Record the maturity of the bonds on December 31, 2023.** ### Journal Entry Worksheet 1. **Issuance of Bonds on December 31, 2021:** - Record the issuance of bonds. 2. **First through Fourth Interest Payments:** - Semiannual interest payments and bond amortization should be recorded based on the straight-line method. 3. **Maturity of Bonds on December 31, 2023:** - Record the maturity, which involves removing the bonds from the books. To assist with the procedures, please refer to the required journal entries for each of the steps enumerated above. ### Interactive Component: Enter your journal entries using the provided tabs (Required A, Required B, and Required C) to record each transaction accurately. Use the "View transaction list" feature for assistance with standard entries. ### Example Journal Entry (for issuance): **Debits:** - Cash (for carrying value) **Credits:** - Bonds Payable (for par value) - Discount on Bonds Payable (difference between par value and carrying value) By following the straight-line amortization schedule, adjust
Transcribed Image Text:### Dobbs Company Bond Issuance and Amortization **Scenario:** Dobbs Company issues 5%, two-year bonds on December 31, 2021, with a par value of $200,000 and semiannual interest payments. #### Straight-Line Bond Amortization Table | Semiannual Period-End | Unamortized Discount | Carrying Value | |-----------------------|----------------------|----------------| | (0) 12/31/2021 | $12,000 | $188,000 | | (1) 6/30/2022 | 9,000 | 191,000 | | (2) 12/31/2022 | 6,000 | 194,000 | | (3) 6/30/2023 | 3,000 | 197,000 | | (4) 12/31/2023 | 0 | 200,000 | #### Instructions: Use the above straight-line bond amortization table and prepare journal entries for the following: 1. **The issuance of bonds on December 31, 2021.** 2. **The first through fourth interest payments on each June 30 and December 31.** 3. **Record the maturity of the bonds on December 31, 2023.** ### Journal Entry Worksheet 1. **Issuance of Bonds on December 31, 2021:** - Record the issuance of bonds. 2. **First through Fourth Interest Payments:** - Semiannual interest payments and bond amortization should be recorded based on the straight-line method. 3. **Maturity of Bonds on December 31, 2023:** - Record the maturity, which involves removing the bonds from the books. To assist with the procedures, please refer to the required journal entries for each of the steps enumerated above. ### Interactive Component: Enter your journal entries using the provided tabs (Required A, Required B, and Required C) to record each transaction accurately. Use the "View transaction list" feature for assistance with standard entries. ### Example Journal Entry (for issuance): **Debits:** - Cash (for carrying value) **Credits:** - Bonds Payable (for par value) - Discount on Bonds Payable (difference between par value and carrying value) By following the straight-line amortization schedule, adjust
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