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On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for $761,190, which provides the bondholders with a 12% yield.

On January 1, 2020, Larkspur Inc. sold 14% bonds having a maturity value of $710,000 for $761,190, which provides the bondholders with a 12% yield. The bonds are dated January 1, 2020, and mature on January 1, 2025, with interest payable on January 1 of each year. The company follows IFRS and uses the effective interest method.

Prepare the journal entry at the date of issue. (Round answers to 0 decimal places, e.g. 5,255. 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.)


Date

Account Titles and Explanation

Debit

Credit

Jan. 1, 2020

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount


enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

  

  

Prepare a schedule of interest expense and bond amortization for 2020 through 2023. (Round answers to 0 decimal places, e.g. 5,275.)

Schedule of Interest Expense and Bond Premium Amortization
Effective Interest Method
Date
Credit
Cash

Debit
Interest
Expense

Debit
Bonds
Payable

Carrying
Amount of
Bonds

1/1/20








$enter a dollar amount

1/1/21


$enter a dollar amount
$enter a dollar amount
$enter a dollar amount
enter a dollar amount

1/1/22


enter a dollar amount
enter a dollar amount
enter a dollar amount
enter a dollar amount

1/1/23


enter a dollar amount
enter a dollar amount
enter a dollar amount
enter a dollar amount

  

  

Prepare the journal entries to record the interest payment and the amortization for 2020. (Round answers to 0 decimal places, e.g. 5,275. 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.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2020

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount


enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount


enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

Jan. 1, 2021

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount


enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

 

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