80.2K

Verified Solution

Link Copied!

Recording Bond Entries and Preparing an Amortization Schedule-Effective Interest Method, Discount, Interest Accrual Mitchell Inc. issued 28, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield 7%. The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums. Required a. Determine the selling price of the bonds. Round amount to the nearest dollar. b. Prepare an amortization schedule for the full bond term. C. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest accrual. 4. January 1, 2021, interest payment. Bond Selling Price Amortization Schedule Journal Entries a. Selling price of bonds $ 27,144 x b. Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations in the schedule. Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for January 1, 2023. Date Cash Interest Expense Discount Amortization Bonds Payable, Net $ OX 840 $ 950 x $ 110 x 746 x 840 954 x 0 x 0 X Jan. 1, 2020 July 1, 2020 $ Jan. 1, 2021 July 1, 2021 Jan. 1, 2022 July 1, 2022 Jan. 1, 2023 840 958 x 0 x 0 x 840 0 x 0 x 0 x 840 0 X 0 x 0 x 840 OX OX 0 X Total $ 0 x $ 0 x $ 0 X C. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. 1. Jan. 1, 2020 > 27,144 x 0 856 x 0 0 28,000 Cash Discount on Bonds Payable Bonds Payable Interest Expense Bonds Payable Cash 2. Jul. 1, 2020 950 X 0 X 0 110 x 0 840 x 954 x 0 0 114 x 3. Dec. 31, 2020 Interest Expense Discount on Bonds Payable Bonds Payable 4. Jan. 1, 2021 Interest Payable Cash X 0 840 840 O 0 840

Answer & Explanation Solved by verified expert

See Answer