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Fundamental Accounting Principles 25th
Ripkin Company issues 9%, five-year bonds dated January 1, 2021,

Ripkin Company issues 9%, five-year bonds dated January 1, 2021, with a $320,000 par value. The bonds

Question:

Ripkin Company issues 9%, five-year bonds dated January 1, 2021, with a $320,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $332,988. Their annual market rate is 8% on the issue date.

Required

1. Calculate the total bond interest expense over the bonds’ life.

2. Prepare a straight-line amortization table like Exhibit 14.11 for the bonds’ life.

3. Prepare the journal entries to record the first two interest payments.

Exhibit 14.11

Transcribed Image Text:

EXHIBIT 14.11 Semiannual Unamortized Carrying Period-End Premium Value Straight-Line Amortization of Bond Premium (0) 12/31/2021 ... $3,600 $103,600 (1) 6/30/2022 ... 2,700 102,700 (2) 12/31/2022 ... 1,800 101,800 (3) 6/30/2023 ... 900 100,900 During the bond life, carrying value is adjusted to par and the amortized (4) 12/31/2023 ... 100,000 premium to zero.

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1 Par value of the bond is 320000 Coupon are paid semiannually at a coupon rate of 9 Hence Ripkin wi...View the full answer

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Fundamental Accounting Principles

ISBN: 9781260247985

25th Edition

Authors: John J Wild, Ken Shaw

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Question Posted: Oct 26, 2021 01:54 AM

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