On January 1, Year 1, Young Company issued bonds with a face value of $109,000, a stated rate of interest of 11 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 10 percent at the time the bonds were issued. The bonds sold for $115,698. Young used the effective interest rate method to amortize the bond premium.
Required
a. Determine the amount of the premium on the day of issue.
b. Determine the amount of interest expense recognized on December 31, Year 1.
c. Determine the carrying value of the bond liability on December 31, Year 1.
d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense.
On January 1, Year 1, Young Company issued bonds with a face value of $109,000, a stated rate of interest of 11 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 10 percent at the time the bonds were issued. The bonds sold for $115,698. Young used the effective interest rate method to amortize the bond premium. Required a. Determine the amount of the premium on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. c. Determine the carrying value of the bond liability on December 31, Year 1. d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense. Complete this question by entering your answers in the tabs below. Reg A to C Reg D a. Determine the amount of the premium on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. (Round your answer to the nearest dollar amount.) c. Determine the carrying value of the bond liability on December 31, Year 1. (Do not round your intermediate calculations. Round your answer to the nearest dollar amount.) Show less a. Premium on the day of issue b. Interest expense on December 31, Year 1 c Carrying value on December 31, Year 1 Req A to ReqD > On January 1, Year 1, Young Company issued bonds with a face value of $109,000, a stated rate of interest of 11 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 10 percent at the time the bonds were issued. The bonds sold for $115,698. Young used the effective interest rate method to amortize the bond premium. Required a. Determine the amount of the premium on the day of issue. b. Determine the amount of interest expense recognized on December 31, Year 1. c. Determine the carrying value of the bond liability on December 31, Year 1. d. Provide the general journal entry necessary to record the December 31, Year 1, interest expense. Complete this question by entering your answers in the tabs below. Req A to C Reg D Provide the general journal entry necessary to record the December 31, Year 1, interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest dollar amount.) View transaction list Journal entry worksheet 1 > Record the interest expense. Note: Enter debits before credits. General Journal Debit Credit Date Year 1 Record entry Clear entry View general journal
