Bond interest and discount amortization.
Logan Corporation issued $800,000 of 8% bonds on October 1, 2011, due on
October 1, 2016. The interest is to be paid twice a year on April 1 and October
1. The bonds were sold to yield 10% effective annual interest. Logan Corporation closes its books annually
on December 31.
Instructions
A Complete an amortization schedule for the above bond (for all periods)
in a similar format as below. (Round all
answers to the nearest dollar.) Use the
effective-interest method.
(a) Complete an amortization schedule for the above bond (for all
periods) in a similar format as below.
(Round all answers to the nearest dollar.) Use the effective-interest method.
B Prepare the journal entries for the following:
1. October 1, 2011 bond issue
2. Adjusting entry for December 31, 2011 (adjusting entry should cover 3
months)
3. April 1, 2012 entry
4. October 1, 2012 entry
5. Adjusting entry from December 31, 2012
C Compute the interest expense to
be reported in the income statement for the year ended December 31, 2011 and
December 31, 2012.
TUTORIAL
PREVIEW
(b) Journal entries:
|
Date
|
Account Title
|
Debit
|
Credit
|
|
01-Oct-11
|
Cash
|
738,224
|
|
|
Discount on Bonds Payable
|
61,776
|
||
|
Bonds Payable
|
800,000
|
File name: Logan Corporation.xls File type: xls PRICE: $10
