Question
Woodworker Corporation issues even more bonds.The stated rate on the bond exceeds the market rate.The company issued $150,000 of 9% three-year bonds at 101 on
Woodworker Corporation issues even more bonds.The stated rate on the bond exceeds the market rate.The company issued $150,000 of 9% three-year bonds at 101 on January 1, 2018.Interest is paid semiannually on January 1 and July 1.Woodworker uses the straight-line method of amortization.
The corporation would like to better understand the bond issue.Using the table below as a guide, calculate the interest expense, amortization of any premium, and the carrying value of the bond at the end of each year for the life of the bond.
Date
Interest expense
Amortization of premium
Premium
Carrying value of bond
Jan. 1, 2018
Jul. 1, 2018
Dec. 31, 2018
Jul. 1, 2019
Dec. 31, 2019
Jul. 1, 2019
Dec. 31, 2019
Make the appropriate journal entries for each of the following events:
o2018
January 1 - Bond issuance
July 1 - Interest payment
December 31 - Record any accrued interest on the bonds
o2019
December 31 - Bond redemption at maturity
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
7th Edition
1-119-57105-6, 978-1119571056
