Question
Mos Motor Corp. issued $230,000 of 8%, 5-year bonds on April 1, 2021. Interest is payable semi-annually on April 1 and October 1. On April
Mos Motor Corp. issued $230,000 of 8%, 5-year bonds on April 1, 2021. Interest is payable semi-annually on April 1 and October 1. On April 1, 2023, immediately after making and recording the semi-annual interest payment, Mos redeemed the bonds. Below is a partial amortization schedule for the first few years of the bond issue.
Mo's Motor Corp. Bond Discount Amortization Schedule | |||||||||
Interest Period | Interest Payment | Interest Expense | Amortization | Bond Amortized Cost | |||||
01-Apr. | 2021 | $220,900.37 | |||||||
01-Oct. | 2021 | $9,200.00 | $9,940.52 | $740.52 | 221,640.89 | ||||
01-Apr. | 2022 | 9,200.00 | 9,973.84 | 773.84 | 222,414.73 | ||||
01-Oct. | 2022 | 9,200.00 | 10,008.66 | 808.66 | 223,223.39 | ||||
01-Apr. | 2023 | 9,200.00 | 10,045.05 | 845.05 | 224,068.44 |
1) Were the bonds issued at a discount or at a premium?
The bonds were issued at a |
2)What is the bonds face value?
Face value | $ |
3) Prepare the journal entry to record the payment of interest on Oct 1, 2021? (Credit account titles are automatically indented when the 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. Round answers to 2 decimal places, e.g. 5,275.25.)
Date | Account Titles and Explanation | Debit | Credit |
Oct. 1, 2021 | |||
4) Prepare the journal entry to record the redemption of the bonds assuming they were redeemed at 100. (Credit account titles are automatically indented when the 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. Round answers to 2 decimal places, e.g. 5,275.25.)
Date | Account Titles and Explanation | Debit | Credit |
Apr. 1, 2023 | |||
5) Prepare the journal entry to record the redemption of the bonds assuming they were redeemed at 96. (Credit account titles are automatically indented when the 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. Round answers to 2 decimal places, e.g. 5,275.25.)
Date | Account Titles and Explanation | Debit | Credit |
Apr. 1, 2023 | |||
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