Question

SeaviewSeaview

Magazine issued

$ 360 comma 000$360,000

of​ 15-year,

7 %7%

callable bonds payable on July​ 31,

20182018​,

at

9393.

On July​ 31,

20212021​,

SeaviewSeaview

called the bonds at

103103.

Assume annual interest payments.

Requirements

1.	Without making journal​ entries, compute the carrying amount of the bonds payable at July​ 31, 20212021.
2.	Assume all amortization has been recorded properly. Journalize the retirement of the bonds on July​ 31, 20212021. No explanation is required.

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

20212021.

​(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 $			334,800	. The	discount	on the bonds at
issuance amounts to $	25,200	.

The carrying amount of the bonds payable at July 31, 2021 is $

339,840

.

Requirement 2. Assume all amortization has been recorded properly. Journalize the retirement of the bonds on July​ 31,

20212021.

No explanation is required. ​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

Date			Accounts	Debit	Credit
2021
Jul. 31			Bonds Payable	360,000
			Loss on Retirement of Bonds Payable
			Cash
			Discount on Bonds Payable		5040

Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

ANSWER:-

1.The carrying amount of the bonds payable at the insurance is $342,720.The discount on the bonds issuance amounts to $17280.

Workings:
Bonds Payable	3,60,000
Discount on bonds	(21,600)
Carrying value as on July31,2018	3,38,400
Amortized on July31,2019	1,440
Amortized on July31,2020	1,440
Amortized on July31,2021	1,440
Balance of bonds payable as on July31,2021	3,42,720

2.

Date	Particulars	Debit	Credit
July31,2021	Bonds payable	360000
	Loss on retirement of bonds	28080
	Discount on bonds		17280
	Cash		370800

The balance in the discount on bonds payable shall be written off.

Further the bonds are being retired at 103, a premium of 3%.Therefore the total amount shall be accounted as loss on retirement of bonds.