Sprint Corporation You are an accounting intern working for Spring Fit Corporation. You have recently been assigned to help one of the accountants who is doing an internal audit of the business. You will be assisting with a review of the payables issued by Spring Fit Corporation. Your first task is to review the previous year's journal entries shown as follows Journal Entries, 2014 PAGE 15 JOURNAL ACCOUNTING EQUATION POST, BET CREDIT LILITIES KUTY DERIT 1,067,060,00 1 62.060.00 DATE DESCRUTION lant Cash Premium on Bonds Payable Bonds Payable han 50 interest Expense Premiom on Bonds Payable 1.000.000.00 19.19700 5.105.00 22 500.00 MI Cash 128000 Discount on Bonds able 78720.00 78,720.00 2,000,000.00 Springfit Corporation 1 Discount on Bonds Payable Bonds Payable 10 Oct.1 Cash Notes Payable Dec 31 Interest Expense Premium on Bonds Payable 1,100,000.00 1,100,000.00 12 19,397.00 11 5,103.00 Cash 22,500.00 TE 31 16,500.00 1 16,500.00 Interest Expense interest Payable Interest Expense Discount on Bonds Payable 31 41.560.00 6,56000 Cash 55.000.00 31 Income Summary 9685400 Interest Expense 96,854.00 Review the journal entries on the SpringFit Corporation panel, then answer the following questions 1. Assuming that no bonds had been issued prior to 20Y4, how many different bonds appear in the journal entries for this year? 27 2. Which entry shows bonds issued at a contract rate lower than the market rate of interest? Choose the date. July 17 3. How much interest was paid during the year on the bonds in question (2) $ 4. What is the carrying amount of the bonds in question (2) at the end of the year? $ 5. Which entry shows bonds that sold for more than their face amount2 Choose the date Jan, 1 6. How much interest was paid during the year on the bonds in question (52 $45.000 7 7. Assuming that straight-line amortization is used for the bonds in (5), what is the bond life? 10 years 8. What is the carrying value of the bonds in question (5) at the end of the year? 9. Considering only the 2014 journal entries how much interest was probably accrued on the note payable issued during the year? Poin Mastery Problemi Long-Term Liabilities Bonds and Notes Bonds Payable Final Questions 2015 Journal Entries You have been asked to continue your work on the Spring Rt Corporation audit. The journal entries for the current year are shown as follows Journal Entries, 2075 PAGE 1 ACCOUNTING EQUATION JOURNAL DERIT ASSETS EQUITY CREDIT LILITIES POST. REF DESCRIPTION 19.397.00 1 DATE Ion, 30 Interest Expense Premium on Bonds Payable 5 103.00 22.500.00 41.560.00 6.56000 5.000.00 30 Interest Expense Discount on Bonds Payable Gaih 30 Bonds Payabic Can Region Bonds Discount on Bonds Payable 2.000.000.00 41000.00 Previous Next Check My Work SE Submit Assignment for Grading 2015 Journal Entries 10 Cash 1.895400.00 TI 49,500.00 22 Sep, 50 Interest Expense Interest Payable Notes Payable Cash 16,500.00 251,451.00 13 14 317,45100 15 12,728.00 Dec 31 Interest Expense Interest Payable 12.728.00 11 31 Interest Expense 19.397.00 10 Premium on Bonds Payable 3.10300 Cash 27,500.00 20 31 Income Summary 142.582.00 14258700 Interest Expeme SC0.000.00 31 Bonds Payable Premium on Boods Payable 2424.00 20.60000 1 Loss on Redemption of Bonn Cash 55. LO Considering the journal entries for both years, answer the following questions. 1. What is the yearly payment amount required for the note payable? (Assume it is an installment nota) 2. What is the interest rate on the note payable? % 3. Were the bonds in the entry on Dec. 31 of 20Y5 redeemed at maturity? 4. You suspect there is an error in one of the bond redemption entries. Assuming that the amounts are correct, which entry is questionable? Both entries are correct. Why? There is no error No 5. Why do some bonds sell below face value? None of these answers is correct