Question
Solar Energy Inc. issued a $900,000, 5%, five-year bond on October 1, 2020. Interest is paid annually each October 1. Solars year-end is December 31.
Solar Energy Inc. issued a $900,000, 5%, five-year bond on October 1, 2020. Interest is paid annually each October 1. Solars year-end is December 31. Period Ending Cash Interest Paid Period Interest Expense Discount Amort. Unamortized Discount Carrying Value Oct. 1/20 $ 37,911 $ 862,089 Oct. 1/21 $ 45,000 $ 51,725 $ 6,725 31,186 868,814 Oct. 1/22 45,000 52,129 7,129 24,057 875,943 Oct. 1/23 45,000 52,557 7,557 16,500 883,500 Oct. 1/24 45,000 53,010 8,010 8,490 891,510 Oct. 1/25 45,000 53,490 8,490 0 900,000 $ 225,000 $ 262,911 $ 37,911 Assume that interest has already been paid on October 1, 2023. Required: Using the amortization schedule provided above, record the entry to retire the bonds on October 1, 2023, for cash of: a. $881,000 b. $883,500 c. $886,900
Solar Energy Inc. issued a $900,000, 5%, five-year bond on October 1, 2020. Interest is paid annually each October 1. Solars year-end is December 31. Cash Interest Paid Period Interest Expense Discount Amort. Period Ending Oct. 1/20 Oct. 1/21 Oct. 1/22 Oct. 1/23 Oct. 1/24 Oct. 1/25 $ 45,000 45,000 45,000 45,000 45,000 $225,000 $ 51,725 52,129 52,557 53,010 53,490 $262,911 $ 6,725 7,129 7,557 8,010 8,490 $37,911 Unamortized Discount $37,911 31,186 24,057 16,500 8,490 0 Carrying Value $862,089 868,814 875,943 883,500 891,510 900,000 Assume that interest has already been paid on October 1, 2023. Required: Using the amortization schedule provided above, record the entry to retire the bonds on October 1, 2023, for cash of: a. $881,000 b. $883,500 C. $886,900 View transaction list Journal entry worksheet Record the retirement of bond for $881,000. Note: Enter debits before credits. Date General Journal Debit Credit Oct. 1 2023 Record entry Clear entry View general journalStep by Step Solution
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