Question
On March 1 of Year 1, Sandollar Inc. issued $18,000 of bonds at 105, paying 8% cash interest semiannually on June 30 and December 31.
On March 1 of Year 1, Sandollar Inc. issued $18,000 of bonds at 105, paying 8% cash interest semiannually on June 30 and December 31. The bonds are dated January 1 of Year 1 and are scheduled to mature at December 31 of Year 4. On September 1 of Year 1, $6,000 of the bonds were retired when the bonds were selling at 89. Assume the straight-line interest method is used to amortize bond discounts and premiums. Note: When answering the following questions, round your answers to the nearest whole dollar. a. Provide the entry for the bond issuance on March 1 of Year 1.
Date | Account Name | Debit | Credit |
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Mar. 1 | CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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To record the bond issuance. |
b. Provide the entry for the interest payment on June 30 of Year 1.
Date | Account Name | Debit | Credit |
---|---|---|---|
June 30 | CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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To record the interest payment. |
c. Provide the entry to recognize interest expense for the portion of the bond issue retired on September 1 of Year 1.
Date | Account Name | Debit | Credit |
---|---|---|---|
Sept. 1 | CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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To record the interest payment. |
d. Provide the entry to record the bond retirement on September 1 of Year 1.
Date | Account Name | Debit | Credit |
---|---|---|---|
Sept. 1 | CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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CashInventoryEquipmentLandDeferred RevenueBonds PayableDiscount on Bonds PayableDiscount and Debt Issuance CostsPremium on Bonds PayableFair Value AdjustmentBonds PayableNote PayableDiscount on Note PayablePremium on Note PayableFair Value AdjustmentNote PayableInterest PayableCommon StockPaid-in Capital in Excess of ParCommon StockPaid-in CapitalStock WarrantsRetained EarningsPrior Period AdjustmentDebt Conversion ExpenseInterest ExpenseLoss on Redemption of BondsGain on Redemption of BondsUnrealized Gain or LossIncomeUnrealized Gain or LossOCI | Answer
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To record bond retirement. |
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