chp 9 mastery

SpringFit Corporation

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Bonds Payable

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Final Questions

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SpringFit Corporation

You are an accounting intern working for SpringFit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by SpringFit Corporation. Your first task is to review the previous years journal entries, shown as follows:

Journal Entries, Year 1

PAGE 15

GENERAL JOURNAL

ACCOUNTING EQUATION

DATE

ACCOUNT TITLE

POST. REF.

DEBIT

CREDIT

ASSETS

LIABILITIES

EQUITY

1

Jan. 1

Cash

1,008,960.00

2

Premium on Bonds Payable

58,960.00

3

Bonds Payable

950,000.00

4

Jun. 30

Interest Expense

18,427.00

5

Premium on Bonds Payable

2,948.00

6

Cash

21,375.00

7

Jul. 1

Cash

1,921,280.00

8

Discount on Bonds Payable

78,720.00

9

Bonds Payable

2,000,000.00

10

Dec. 31

Interest Expense

18,427.00

11

Premium on Bonds Payable

2,948.00

12

Cash

21,375.00

13

31

Interest Expense

41,560.00

14

Discount on Bonds Payable

6,560.00

15

Cash

35,000.00

16

31

Income Summary

78,414.00

17

Interest Expense

78,414.00

Review the journal entries on the SpringFit Corporation panel, then answer the following questions.

1.	Assuming that no bonds had been issued prior to Year 1, how many different bonds appear in the journal entries for this year?
2.	Which entry shows bonds issued at a contract rate lower than the market rate of interest? Choose the date.
3.	How much interest was paid during the year on the bonds in question (2)?
4.	What is the carrying amount of the bonds in question (2) at the end of the year?
5.	Which entry shows bonds that sold for more than their face amount? Choose the date.
6.	How much interest was paid during the year on the bonds in question (5)?
7.	Assuming that straight-line amortization is used for the bonds in (5), what is the bond life?
8.	What is the carrying value of the bonds in question (5) at the end of the year?