Extra Credit Bond Handout

ROUND ALL ANSWERS TO THE NEAREST DOLLAR

Lynch Corp. issued $600,000, 6 %, 7-year bonds dated July 1, 2018 at 92.07 to yield 8%. Interest dates are January 1 and July 1.

Prepare the entry to record the sale on 7/1/18:

Prepare the bond amortization table through 1/1/20.

Prepare the 12/31/18 year-end entry:

What is the effect on the financial statements if the 12/31/18 adjusting entry is omitted?

What is the carrying value of the bonds on the 12/31/18 balance sheet?

Prepare the 1/1/19 entry required for payment of semiannual interest.

Prepare the 7/1/19 entry required for payment of semiannual interest.

How much interest is paid to the bondholders in 2018? In 2019?

How much Interest Expense should be reported on the 2018 Income Statement? On the 2019 Income Statement?

How much Interest Payable will appear on the 12/31/18 Balance Sheet?