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P14-5 (Comprehensive Bond Problem) (Note: Calculations with financial calculators or tables might result in slightly different values due to rounding.) Instructions: (Round to the nearest

P14-5 (Comprehensive Bond Problem) (Note: Calculations with financial calculators or tables might result in slightly different values due to rounding.)
Instructions: (Round to the nearest dollar.) In each of the following independent cases the company closes its books on December 31. For the two cases prepare all of the relevant journal entries from the time of sale until the date indicated. Use the effective interest method for discount and premium amortization (construct amortization tables where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made.)
1 Lime Co. sells $600,000 of 9% bonds on March 1, 2014. The
bonds pay interest on October 1 and April 1. The due date of the bonds is October 1, 2018.
The bonds yield 8% Give the entries through December 31, 2015.
Apr 1, 14 cas Amount
Account Title Amount
Account Title Amount
Maturity value of bonds payable Amount
Present value of $250,000 due in 7 periods at 6% Formula
Present value of interest payable semiannually Formula
Proceeds from sale of bonds Formula
Discount on bonds payable Formula
Sep 1, 14 Account Title Amount
Account Title Amount
Account Title Amount
Dec 31, 14 Account Title Amount
Account Title Amount
Account Title Amount
Note: Amortization table is semi-annual, interest rate is stated as annual value.
Mar 1, 15 Account Title Amount
Account Title Amount
Account Title Amount
Account Title Amount
Sep 1, 15 Account Title Amount
Account Title Amount
Account Title Amount
Dec 31, 15 Account Title Amount
Account Title Amount
Account Title Amount
Schedule of Bond Discount Amortization
Effective Interest Method
10% Bonds Sold to Yield 12%
Date Cash Paid Interest Expense Bond Discount Carrying Value of Bonds
Mar 1, 14 Amount
Sep 1, 14 Formula Formula Formula Formula
Mar 1, 15 Formula Formula Formula Formula
Sep 1, 15 Formula Formula Formula Formula
Mar 1, 16 Formula Formula Formula Formula
Sep 1, 16 Formula Formula Formula Formula
Mar 1, 17 Formula Formula Formula Formula
Sep 1, 17 Formula Formula Formula Formula
2. Lemon Co. sells $1,000,000 of 10% bonds on August 1, 2014. The
bonds pay interest on February 1 and August 1. The due date of the bonds is August 1, 2017. The bonds
yield 12% On October 1, 2015, Lemon buys back $20,000
worth of the bonds for $218,000 (includes accrued interest). Give the entries through
1-Feb-16
Jun 1, 14 Account title Amount
Account title Amount
Account title Amount
Maturity value of bonds payable Amount
Present value of $250,000 due in 7 periods at 6% Formula
Present value of interest payable semiannually Formula
Proceeds from sale of bonds Formula
Premium on bonds payable Formula
Dec 1, 14 Account Title Amount
Account Title Amount
Account Title Amount
Note: Amortization table is semi-annual, interest rate is stated as annual value.
Dec 31, 14 Account title Amount
Account title Amount
Account title Amount
Jun 1, 15 Account Title Amount
Account Title Amount
Account Title Amount
Account Title Amount
Oct 1, 15 Account title Amount
Account title Amount
Account title Amount
Oct 1, 15 Account title Amount
Account title Amount
Account title Amount
Account title Amount
Net carrying amount of bonds redeemed - Par value Amount
Unamortized premium Amount
Formula
Reacquisition price Amount
Gain on redemption Formula
Dec 1, 15 Account title Amount
Account title Amount
Account title Amount
Dec 31, 15 Account title Amount
Account title Amount
Account title Amount
Jun 1, 16 Account title Amount
Account title Amount
Account title Amount
Account title Amount
Dec 1, 16 Account Amount
Account Amount
Account Amount
Schedule of Bond Discount Amortization
Effective Interest Method
12% Bonds Sold to Yield 10%
Date Cash Paid Interest Expense Bond Premium Carrying Value of Bonds
Jun 1, 14 Amount
Dec 1, 14 Formula Formula Formula Formula
Jun 1, 15 Formula Formula Formula Formula
Dec 1, 15 Formula Formula Formula Formula
Jun 1, 16 Formula Formula Formula Formula
Dec 1, 16 Formula Formula Formula Formula
Jun 1, 17 Formula Formula Formula Formula
Dec 1, 17 Formula Formula Formula Formula
Jun 1, 18 Formula Formula Formula Formula

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