Question

Question: can I have answers with the five requirements?

Golf World, Inc., issued $240,000 of 6%, 15-year bonds dated January 1, 2018 that will pay interest semiannually on June 30 and December 31. These bonds were issued at

$198,494, and the market rate of interest was 8% at the issue date.

Notice that you are given the face value and the selling price, so you can already determine if it was sold at a Discount or a Premium. This problem is designed to provide practice building amortization tables, but you still must verify that the selling price provided is correct using both Excel time value of money prebuilt formulas as well as verifying the amount by reading the tables manually. Your instructor will be looking for this as a way you can "show your work."

Requirements:

1.   Create an amortization table using tools reviewed from your Excel textbook from CIS 155. Be sure to total the cash interest to be paid and the total interest expense over the life of the bond.

2.   Prepare the January 1, 2018 journal entry for the initial issuance.

3.   Prepare the journal entries to record the first two interest payments.

4.   Golf World decided to retire the bonds early on January 1, 2023, at 105. Prepare the necessary journal entries to record this early retirement.

5.   Prove your numbers provided in the problem are correct by showing the table values you would have used to calculate this manually. This is how you will “show your work,” proving the Excel formulas were used correctly.

Answer 1

Journal Entry on jan1,2018

2.Cash/bank a/c Dr.198494

Discount on Issue a/c Dr.41506

To Bond Payable a/c 240000

3.Interest Expense a/c Dr.7200

To Cash a/c 7200

(being cash pain on 30th june)

Interest Expense a/c Dr.7200

To Cash a/c 7200

(being cash pain on 31st Dec.)

P&l a/c Dr.17167.067

To Interest Expense a/c 14400

To Discount on Issue a/c 2767.067

(being year end entry for interest and discount expense)

4.If company wants to retire the bond for 240000 than entry will be as follows

Bond Payable a/c Dr.240000

P&l a/c Dr.3331.737

To Cash a/c 240000

To Discount a/c 3331.737