2. On January 1, 2017, Lachte Corporation issued $1,800,000 face value, 5%, 10- year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lachte uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1.
Laverne purchased a new piece of equipment to be used in its new facility. The $370,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a $320,000, 8%, 5-year mortgage payable issued on January 1, 2017. The terms provide for annual installment payments of $80,146 on December 31. Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to 0 decimal places, eg. 125.) Cash Annual Interest Period Interest Expense Reduction of Principal Principal Balance Payment Issue Date $ $ $ $ 1 2 3 4 5 Amount may be off due to rounding. Prepare the journal entry related to the notes payable for December 31, 2017. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 e Textbook and Media List of Accounts Show the balance sheet presentation for this obligation for December 31, 2017. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, eg. 125.) LAVERNE Balance Sheet (Partial) December 31, 2017 + + $ e Textbook and Media List of Accounts Prepare the journal entry to record the issuance of the bonds on January 1, 2017. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Cash 1667518 Discount on Bonds Payable 132482 Bonds Payable 1800000 eTextbook and Media List of Accounts Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue. (Round answers to O decimal places, e.g. 125.) LACHTE CORP. Bond Discount Amortization Effective-Interest Method-Annual Interest Payments Interest Expense to Be Discount Unamortized Recorded Amortization Discount Annual Interest Periods Interest to Be Paid Bond Carrying Value Issue date $ 90000 $ $ $ $ 1 90000 2 90000 3 90000 e Textbook and Media List of Accounts Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2017. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 e Textbook and Media List of Accounts Prepare the journal entry to record the payment of interest on January 1, 2018. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 e Textbook and Media Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2018. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 e Textbook and Media List of Accounts
