Question

The board of directors of Carlie Services Inc. authorized the issuance of $300,000 face value, 20-year,...

The board of directors of Carlie Services Inc. authorized the issuance of $300,000 face value, 20-year, 7 percent bonds dated April 1, 2016, and maturing on April 1, 2036. Interest is payable semiannually on April 1 and October 1. Cloud uses the calendar year as its fiscal year. The bond transactions that occurred in 2016 and 2017 follow.

  

DATE

TRANSACTIONS FOR 2016

  Apr.

1

Issued $210,000 of bonds at face value.

  Oct.

1

Paid the semiannual interest on the bonds issued.

  Dec.

31

Recorded the adjusting entry for the accrued bond interest.

31

Closed the Bond Interest Expense account to the Income Summary account.

  

DATE

TRANSACTIONS FOR 2017

  Jan.

1

Reversed the adjusting entry made on December 31, 2016.

  Apr.

1

Issued $90,000 of bonds at face value.

1

Paid the interest for six months on the bonds previously issued.

  Oct.

1

Paid the interest for six months on the outstanding bonds.

  Dec.

31

Recorded the adjusting entry for the accrued bond interest.

31

Closed the Bond Interest Expense account to the Income Summary account.

   

Record the transactions in general journal form.

Issued $210,000 of bonds at face value.

Paid the semiannual interest on the bonds issued.

Recorded the adjusting entry for the accrued bond interest.

Closed the Bond Interest Expense account to the Income Summary account.

Reversed the adjusting entry made on December 31, 2016.

Issued $90,000 of bonds at face value.

Paid the interest for six months on the bonds previously issued.

Paid the interest for six months on the outstanding bonds.

Recorded the adjusting entry for the accrued bond interest.

Closed the Bond Interest Expense account to the Income Summary account.

Analyze:

Based on the transactions given, what is the balance in the Bonds Payable account on December 31, 2016?

Homework Answers

Answer #1
1-Apr-16 Cash 210000
Bonds payable 210000
1-Oct-16 Bond interest expense (210000*7%*1/2) 7350
Cash 7350
31-Dec-16 Bond interest expense (210000*7%*1/4) 3675
Interest payable 3675
31-Dec-16 Income summary 11025
Bond interest expense 11025
1-Jan-17 Interest payable 3675
Bond interest expense 3675
1-Apr-17 Cash 90000
Bonds payable 90000
1-Apr-17 Bond interest expense (210000*7%*1/2) 7350
Cash 7350
1-Oct-17 Bond interest expense (300000*7%*1/2) 10500
Cash 10500
31-Dec-17 Bond interest expense (300000*7%*1/4) 5250
Interest payable 5250
31-Dec-17 Income summary 15750
Interest expense 15750
BALANCE IN THE BONDS PAYABLE ACCOUNT = $300000
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