Bond Premium, Entries for Bonds Payable Transactions, Interest
Method of Amortizing Bond Premium. Campbell, Inc. produces and
sells outdoor equipment. On July 1, Year 1, Campbell issued
$63,000,000 of 20-year, 14% bonds at a market (effective) interest
rate of 12%, receiving cash of $72,463,860. Interest on the bonds
is payable semiannually on December 31 and June 30. The fiscal year
of the company is the calendar year. Required: If an amount box
does not require an entry, leave it blank or enter "0". 1.
Journalize the entry to record the amount of cash proceeds from the
issuance of the bonds. Year 1 July 1 2. Journalize the entries to
record the following: a. The first semiannual interest payment on
December 31, Year 1, and the amortization of the bond premium,
using the interest method. (If required, round your answers to the
nearest dollar.) Year 1 Dec. 31 b. The interest payment on June 30,
Year 2, and the amortization of the bond premium, using the
interest method. (Round your answers to the nearest dollar.) Year 2
June 30 3. Determine the total interest expense for Year 1. $
| CHART
OF ACCOUNTS |
|
Campbell, Inc. |
|
General Ledger |
|
ASSETS |
| 110 |
Cash |
| 111 |
Petty Cash |
| 121 |
Accounts Receivable |
| 122 |
Allowance for Doubtful
Accounts |
| 126 |
Interest Receivable |
| 127 |
Notes Receivable |
| 131 |
Merchandise Inventory |
| 141 |
Office Supplies |
| 142 |
Store Supplies |
| 151 |
Prepaid Insurance |
| 191 |
Land |
| 192 |
Store Equipment |
| 193 |
Accumulated Depreciation-Store
Equipment |
| 194 |
Office Equipment |
| 195 |
Accumulated Depreciation-Office
Equipment |
|
LIABILITIES |
| 210 |
Accounts Payable |
| 221 |
Salaries Payable |
| 231 |
Sales Tax Payable |
| 232 |
Interest Payable |
| 241 |
Notes Payable |
| 251 |
Bonds Payable |
| 252 |
Discount on Bonds Payable |
| 253 |
Premium on Bonds Payable |
|
EQUITY |
| 311 |
Common Stock |
| 312 |
Paid-In Capital in Excess of
Par-Common Stock |
| 315 |
Treasury Stock |
| 321 |
Preferred Stock |
| 322 |
Paid-In Capital in Excess of
Par-Preferred Stock |
| 331 |
Paid-In Capital from Sale of
Treasury Stock |
| 340 |
Retained Earnings |
| 351 |
Cash Dividends |
| 352 |
Stock Dividends |
| 390 |
Income Summary |
|