Question

# LakesideLakeside Magazine issued \$690,000 of​ 15-year, 9% callable bonds payable on July​ 31, 2018​, at 97.On...

LakesideLakeside Magazine issued \$690,000 of​ 15-year, 9% callable bonds payable on July​ 31, 2018​, at 97.On July​ 31, 2021​, Lakeside called the bonds at 102. Assume annual interest payments.

Requirement 1. Without making journal​ entries, compute the carrying amount of the bonds payable at July​ 31, 2021.

​(Assume bonds payable are amortized using the​ straight-line amortization​ method.)

​First, complete the sentence below.

 The carrying amount of the bonds payable at issuance (July 31, 2018) is \$ 669,300 . The discount on the bonds at issuance amounts to \$ 20,700 .
 The carrying amount of the bonds payable at July 31, 2021 is \$
 2 Assume all amortization has been recorded properly. Journalize the retirement of the bonds on July​ 31, 2021. No explanation is required

 Discount amount = 690000*3% = 20700 Un-amortised discount amount on July 31,21 = (20700*12/15) = 16560 (being straight line amortisation) Carrying amount of bonds payable at July 31, 21 = 690000 - 16560 = 673440 Sentence: Carrying amount at the issuance is 669300 with discount amount 20700. The carrying amount of the bonds payable at July 31, 21 is \$673440. Journal entry towards retirement of the bonds on July 31, 21 : ACCOUNTS TITLES: Debit \$ Credit \$ Bonds Payable 690000 Loss on retirement of Bonds Payable 30360 Discount on Bonds Payable 16560 Cash 703800 (690000*102%)