Exercise 17-3

On January 1, 2017, Teal Company purchased10% bonds having a maturity value of $340,000, for $367,149.34. The bonds provide the bondholders with a8% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Prepare the journal entry at the date of the bond purchase.(Enter answers to 2 decimal places, e.g. 2,525.25.Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1, 2017enter an account title to record the transaction on January 1, 2017

enter a debit amount

enter a credit amount

enter an account title to record the transaction on January 1, 2017

enter a debit amount

enter a credit amount

SHOW LIST OF ACCOUNTS

a bond amortization schedule.(Round answers to 2 decimal places, e.g. 2,525.25.)

Schedule of Interest Revenue and Bond Premium Amortization

Effective-Interest Method

Date

Cash

Received

Interest

Revenue

Premium

Amortized

Carrying Amount

of Bonds

1/1/17$

enter a dollar amount rounded to 2 decimal places

$

enter a dollar amount rounded to 2 decimal places

$

enter a dollar amount rounded to 2 decimal places

$

enter a dollar amount rounded to 2 decimal places

1/1/18enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

1/1/19enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

1/1/20enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

1/1/21enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

1/1/22enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

enter a dollar amount rounded to 2 decimal places

SHOW LIST OF ACCOUNTS

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2017enter an account title to record the transaction on December 31, 2017

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 31, 2017

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 31, 2017

enter a debit amount

enter a credit amount

SHOW LIST OF ACCOUNTS

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2018.(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2018enter an account title to record the transaction on December 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 31, 2018

enter a debit amount

enter a credit amount