The Gorman Group issued $920,000 of 9% bonds on June 30, 2016,for $1,011,047. The bonds were dated on June 30 and mature on June30, 2036 (20 years). The market yield for bonds of similar risk andmaturity is 8%. Interest is paid semiannually on December 31 andJune 30.
Required:
Complete the below table to record the company's journal entry.(Enter interest rate to 1 decimal place. (i.e. 0.123 shouldbe entered as 12.3).)
Dec 31/2016 amount interest rate taotal interest expense * = cash * = Amortization of premium on bonds June 30/ 2017 amount interest rate total interest expense * = cash * = Amortization of premium on bonds
1. to 3. Prepare the journal entry to record their issuance by The GormanGroup on June 30, 2016, interest on December 31, 2016 and intereston June 30, 2017 (at the effective rate). (If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.)
1.Record the issuance of the bond on June 30, 2016.
2.Record the interest on December 31, 2016 (at the effectiverate).
3.Record the interest on June 30, 2017 (at the effectiverate).
The Gorman Group issued $920,000 of 9% bonds on June 30, 2016,for $1,011,047. The bonds were dated on June 30 and mature on June30, 2036 (20 years). The market yield for bonds of similar risk andmaturity is 8%. Interest is paid semiannually on December 31 andJune 30.
| Required: |
| Complete the below table to record the company's journal entry.(Enter interest rate to 1 decimal place. (i.e. 0.123 shouldbe entered as 12.3).)
| |||||||||||||||||||||||||||||||||||||||||||||||||
Related questions
Exercise 10-6 Straight-Line: Recording bond issuance and premium amortization LO P1, P3
Woodwick Company issues 7%, five-year bonds, on December 31, 2016, with a par value of $99,000 and semiannual interest payments.
| Semiannual Period-End | Unamortized Premium | Carrying Value | ||||||
| (0) | 12/31/2016 | $ | 8,091 | $ | 107,091 | |||
| (1) | 6/30/2017 | 7,282 | 106,282 | |||||
| (2) | 12/31/2017 | 6,473 | 105,473 | |||||
Use the above straight-line bond amortization table and prepare journal entries for the following.
(a) The issuance of bonds on December 31, 2016.
(b) The first interest payment on June 30, 2017.
(c) The second interest payment on December 31, 2017.
1/a. Record the issue of bonds with a par value of $99,000 cash on December 31, 2016.
2/b. Record the first interest payment on June 30, 2017.
3/c. Record the second interest payment on December 31, 2017.
Effective Interest Premium Amortization
Polk Incorporated issued $130,000 of 13% bonds on July 1, 2013,for $134,421.04. The bonds were dated January 1, 2013, pay intereston each June 30 and December 31, are due December 31, 2017, andwere issued to yield 12%. Polk uses the effective interest methodof amortization.
Required:
Prepare the journal entries to record the issue of the bonds onJuly 1, 2013, and the interest payments on December 31, 2013, andJune 30, 2014. If an amount box does not require an entry, leave itblank. Round your answers to two decimal places, if necessary. |
