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Rico company issued $400,000, 9%, 20 year bonds on january 1, 2017, at 103. Interest is...

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Question

Accounting

Rico company issued $400,000, 9%, 20 year bonds on january 1,2017, at 103. Interest is payable annually on January 1. Rico usesstraight-line amortization for bond premium or discount.

Instructions

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Prepare the journal entries to record the following.

a) The issuance of the bonds

b) The accrual of interest and the premium amortization ondecember 31, 2017

c) The payment of interest on january 1, 2018

d) The redemption of the bonds at maturity, assuming interestfor the last interest period has been paid and recorded.

Answer & Explanation Solved by verified expert
4.4 Ratings (861 Votes)
a Date Account titles and Explanation Debit Credit January 1 2017 Cash 412000 Bonds Payable 400000 Premium on Bonds Payable 12000 To record issuance of bonds payable b Date Account titles and Explanation Debit Credit December    See Answer
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