Answered: Required: Provide the entries to record…

Required: Provide the entries to record the bond interest on 28 February and the bond retirement. transection/event select "No journal entry reguired" in the first account field Do not

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 31 December 20X7, a company has the following bond on the statement of financial position:
Bond payable, 7%, interest due semi-annually on 31 Dec. and 3e
June; maturity date, 30 June 20X11
Premium on bonds payable
$5,600,000
47,040
$5,647,040
On 28 February 20X8, 20% of the bond was retired for $1,232,000 plus accrued interest to 28 February. Interest was paid on this date
only for the portion of the bonds that were retired. Premium amortization was recorded on this date in the amount of $450,
representing amortization on the retired debt only.

Required:
Provide the entries to record the bond interest on 28 February and the bond retirement. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your
answers to the nearest whole dollar amount.)
X Answer is not complete.
No
Transaction
General Journal
Debit
Credit
Interest expense
12,617 O
a.
Premium on bonds payable
450
Bonds payable
13,067
2
b.
Bonds payable
1,120,000
Premium on bonds payable
8,958 O
Interest expense
13,067 X
Loss, retirement of debt
103,042 X
Cash
1,245,067 X

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