P14-6 (Issuance of Bonds between Interest Dates, Straight-Line,
Redemption) Presented below are selected transactions on the books of Simonson
Corporation.
P14-6 Simonson Corporation
01-May-14
Dec. 31
Jan. 1, 2015 April 1
Dec. 31
Instructions
Bonds payable with a par value of $900,000, which are dated January 1,
2014, are sold at 106 plus accrued interest. They are coupon bonds, bear
interest at 12% (payable annually at January 1), and mature January 1, 2024.
(Use interest expense account for accrued interest.) Adjusting entries are made
to record the accrued interest on the bonds, and the amortiza- tion of the
proper amount of premium. (Use straight-line amortization.) Interest on the
bonds is paid. Bonds with par value of $360,000 are called at 102 plus accrued
interest, and redeemed. (Bond premium is to be amortized only at the end of
each year.) Adjusting entries are made to record the accrued interest on the
bonds, and the proper amount of premium amortized. (Round to two decimal
places.)
Prepare journal entries for the transactions above.
TUTORIAL
PREVIEW
P14-6
|
01-May-14
|
Cash ($900,000 X 106%) + ($900,000 X 12% X 4/12)
|
990,000
|
|
|
|
Bonds Payable
|
|
900,000.00
|
|
|
Premium on Bonds Payable
|
|
54,000.00
|
|
|
Interest Expense ($900,000 X 12% X 4/12)
|
|
36,000.00
|
File name P14-6 Simonson.xls File
type: doc PRICE: $8
