Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2020, Shamrock Inc. sold 12% bonds having a maturity value of $850,000 for $949,185, which provides the bondholders with a 9% yield.
On January 1, 2020, Shamrock Inc. sold 12% bonds having a maturity value of $850,000 for $949,185, which provides the bondholders with a 9% 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. (a) Your answer is correct. Prepare the journal entry at the date of issue. (Round answers to O 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 O for the amounts.) Date Account Titles and Explanation Jan. 1, 2020 Cash Bonds Payable Debit 949,185 Credit 949.185 (b) Your answer is correct. Prepare a schedule of interest expense and bond amortization for 2020 through 2023. (Round answers to O decimal places, e.g. 5,275.) Schedule of Interest Expense and Bond Premium Amortization Credit Date Cash 1/1/20 1/1/21 102000 Effective Interest Method Debit Interest Expense 85427 Debit Carrying Bonds Payable Amount of Bonds 949,185 16573 932612 1/1/22 102000 83935 18065 914547 1/1/23 102000 82309 19691 894856 (c) Prepare the journal entries to record the interest payment and the amortization for 2020. (Round answers to O 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 O for the amounts.) Date Account Titles and Explanation Dec. 31, 2020 Jan. 1, 2021 Debit Credit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started