Question
On June 30, 2020, Cullumber Limited issued $3 million of 20-year, 10% bonds for $3,593,786, which provides a yield of 8%. The company uses the
On June 30, 2020, Cullumber Limited issued $3 million of 20-year, 10% bonds for $3,593,786, which provides a yield of 8%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June 30 and December 31.
A.) Prepare the journal entries to record the following transactions: (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.)
1. | The issuance of the bonds on June 30, 2020 | |
2. | The payment of interest and the amortization of the premium on December 31, 2020 | |
3. | The payment of interest and the amortization of the premium on June 30, 2021 | |
4. | The payment of interest and the amortization of the premium on December 31, 2021 |
B.) Show the proper presentation for the liability for bonds payable on the December 31, 2020 SFP. (Round answer to 0 decimal places, e.g. 5,275.)
Cullumber Limited Statement of Financial Position (Partial) _______________________________ _________________________ _________________________________________ $______________________ | ||
---|---|---|
C.) What amount of interest expense is reported for 2020?
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