DATE DESCRIPTION POST. REF. CREDIT ASSETS LIABILITIES EQUITY DEBIT 1,008,960.00 1 Jan 1 Cash 2 58,960.00 Premium on Bonds Payable Bonds Payable 3 950,000.00 1 Jun 30 18,427.00 Interest Expense Premium on Bonds Payable Cash 5 - 2,948.00 21,375.00 1 1 1 Jul 1 Cash 1,921,280.00 78,720.00 Discount on Bonds Payable Bonds Payable 2,000,000.00 SpringFit Corporation Bonds Payable Year 2 Journal Entries Final Questions SpringFit Corporation 10 Dec. 31 Interest Expense Premium on Bonds Payable 18,427.00 11 2,948.00 12 Cash 21,375.00 31 Interest Expense 41,560,00 14 Discount on Bonds Payable 6,560.00 15 Cash 35,000.00 1 16 31 Income Summary 78.414.00 Interest Expense 78,414.00 1 Review the journal entries on the Spring Fit Corporation panel, then answer the following questions. 12 13 14 15 16 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? astery Problem: Liabilities: Bonds Payable SpringFit Corporation Bonds Payable Year 2 Journal Entries Final Questions Final Questions Considering the journal entries for both years, answer the following questions Were the bonds in the entry on Dec. 31 of Year 2 redeemed at maturity? 2. You suspect there is an error in one of the bond redemption entries. Assuming that the amounts are correct, which entry is questionable? Why? 3. Why do some bonds sell below face value? . Which of the following items are amortized? Check all that apply. Redemption amount Discounts SpringFit Corporation Bonds Payable Year 2 Journal Entries Final Questions Final Questions 4. Which of the following items are amortized? Check all that apply. Redemption amount Discounts Future cash receipts Bonds Interest expenses It depends on the face value of the bond Contract rate of interest Premiums