Fernetti Company sold $6,000,000, 9%, 20-year bonds on January 1, 2014. The bonds were dated January 1,
Question:
Fernetti Company sold $6,000,000, 9%, 20-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1 and July 1. Fernetti Company uses the straight-line method to amortize bond premium or discount. The bonds were sold at 96. Assume no interest is accrued on June 30.
Instructions
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2014.
(b) Prepare a bond discount amortization schedule for the first 4 interest periods.
(c) Prepare the journal entries for interest and the amortization of the discount in 2014 and 2015.
(d) Show the balance sheet presentation of the bond liability at December 31, 2015.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 2014 Jan 1 Cash 6000000 X 96 5760000 Discount on Bonds Payable 240000 Bonds Payable 6000000 b See ...View the full answer
Accounting Principles
ISBN: 9781118566671
11th Edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
