Recording Bond Entries and Reporting Bonds— Effective Interest, Straight-Line Master Corp. issued 5%, $180,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Prepare journal entries on the following dates. 1. January 1, 2020—Issuance of bonds. 2. July 1, 2020—Interest payment. 3. December 31, 2020—Interest accrual. 4. January 1, 2021—Interest payment. b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $166,489 (excluding accrued interest). Hint: Amortize discount on bonds payable over a 118 month bond term. Effective Interest Method Straight-Line Interest Method Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. 1. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer Answer Answer Answer 2. Jul. 1, 2020 Answer Answer Answer Answer Answer Answer Answer Answer Answer 3. Dec. 31, 2020 Answer An

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

See similar textbooks

Related questions

Question

Recording Bond Entries and Reporting Bonds— Effective Interest, Straight-Line

Master Corp. issued 5%, $180,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield 6%. The bonds mature January 1, 2030, and the company uses the effective interest method to amortize bond discounts or premiums.

Required

a. Prepare journal entries on the following dates.

1. January 1, 2020—Issuance of bonds.

2. July 1, 2020—Interest payment.

3. December 31, 2020—Interest accrual.

4. January 1, 2021—Interest payment.

b. Answer part a assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for $166,489 (excluding accrued interest).

Hint: Amortize discount on bonds payable over a 118 month bond term.

Effective Interest Method
Straight-Line Interest Method

Note: List multiple debits or credits (when applicable) in alphabetical order.
Note: Round your answers to the nearest whole dollar.

1.	Jan. 1, 2020	Answer	Answer	Answer
		Answer	Answer	Answer
		Answer	Answer	Answer
2.	Jul. 1, 2020	Answer	Answer	Answer
		Answer	Answer	Answer
		Answer	Answer	Answer
3.	Dec. 31, 2020	Answer	Answer	Answer
		Answer	Answer	Answer
		Answer	Answer	Answer
4.	Jan. 1, 2021	Answer	Answer	Answer
		Answer

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions