Question

Panamint Candy Company prepared the following amortization table for $600,000 of 5-year, 7% bonds issued and...

Panamint Candy Company prepared the following amortization table for $600,000 of 5-year, 7% bonds issued and sold by Panamint on January 1, 2021, for $582,000: Period Cash Interest Discount on Discount on Carrying Value Payment Expense Bonds Payable Bonds Payable (Credit) (Debit) (Credit) Balance At issue $18,000 $582,000 06/30/21 $21,000 $22,800 $1,800 16,200 583,800 12/31/21 21,000 22,800 1,800 14,400 585,600 06/30/22 21,000 22,800 1,800 12,600 587,400 12/31/22 21,000 22,800 1,800 10,800 589,200 06/30/23 21,000 22,800 1,800 9,000 591,000 12/31/23 21,000 22,800 1,800 7,200 592,800 06/30/24 21,000 22,800 1,800 5,400 594,600 12/31/24 21,000 22,800 1,800 3,600 596,400 06/30/25 21,000 22,800 1,800 1,800 598,200 12/31/25 21,000 22,800 1,800 0 600,000

Required:

1. Prepare the entry to recognize the sale of the bonds on January 1, 2021.

2. Prepare the entry to recognize the first interest payment on June 30, 2021.

3. Determine the interest expense for these bonds that Panamint will report on its 2023 income statement.

4. Indicate how these bonds will appear in Panamint’s December 31, 2024 balance sheet.

Homework Answers

Answer #1

Journal entries :

Date account and explanation debit credit
Jan 1,2021 Cash 582000
Discount on bonds payable 18000
Bonds payable 600000
(To record bond issue)
June 30,2021 Interest expense 22800
  Discount on bonds payable 1800
Cash 21000
(To record interest paid)

3) Interest expense will report on its 2023 income statement = 22800*2 = $45600

4) Presentation

Long term liabilities
Bonds payable 600000
Less: Unamortized discount on bonds payable (18000-14400) -3600 596400
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On December 31, 2020, the Company issued $600,000 of 10 year, 6% bonds payable for $624,000,...
On December 31, 2020, the Company issued $600,000 of 10 year, 6% bonds payable for $624,000, yielding an effective interest rate of 5.75%. Interest is payable annually on December 31st of each year. Show the entry for the issuance of the bonds, and the annual payment of interest on December 21, 2021.
Cornerstone Exercise 9-27 (Algorithmic) Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew...
Cornerstone Exercise 9-27 (Algorithmic) Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $1,250,000, 5-year bonds for $1,200,000. The stated rate of interest was 6% and interest is paid annually on December 31. Required: Prepare the amortization table for Drew Company's bonds. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". Drew Company Amortization Table Period Cash Payment (Credit) Interest Expense (Debit) Discount on...
Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2014, Blair Company issued $600,000 of...
Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2014, Blair Company issued $600,000 of 20-year, 11 percent bonds payable for $480,015, yielding an effective interest rate of 14 percent. Interest is payable semiannually on June 30 and December 31. Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and discount amortization (effective interest method) on June 30, 2015, and (c) the semiannual interest payment and discount amortization on December 31, 2015....
Debt Issued at a Premium (Straight Line) On January 1, 2020, Ironman Steel issued $1,400,000, 8-year...
Debt Issued at a Premium (Straight Line) On January 1, 2020, Ironman Steel issued $1,400,000, 8-year bonds for $1,456,000. The stated rate of interest was 7% and interest is paid annually on December 31. Prepare the amortization table for Ironman Steel's bonds. If required, round your answers to nearest whole value. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". Ironman Steel Amortization Table Period Cash Payment (Credit) Interest...
Goodwin, Inc issued $2,000,000 of 5%, 20-year bonds. The bonds were issued at par value on...
Goodwin, Inc issued $2,000,000 of 5%, 20-year bonds. The bonds were issued at par value on January 1. Interest is payable each June 30 and December 31. (a) Prepare the general journal entry to record the issuance of the bonds on January 1. Date Account Name Debit Credit (b) Prepare the general journal entry to record the first interest payment on June 30. Date Account Name Debit Credit
On July 31, 2021, Crane Inc. issued $490,000 of 5-year, 4% bonds at 104. Interest is...
On July 31, 2021, Crane Inc. issued $490,000 of 5-year, 4% bonds at 104. Interest is payable semi-annually on July 31 and January 31. Crane’s fiscal year end is January 31. Is the market rate of interest higher or lower than 4%? The market rate of interest is select an option 2) Record the issue of the bonds on July 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry...
Question 1 (22 marks) Ivanhoe Corporation issued $3.12 million of 7-year, 3% bonds dated January 1,...
Question 1 Ivanhoe Corporation issued $3.12 million of 7-year, 3% bonds dated January 1, 2021 for $2,755,244. The market interest rate when the bonds were issued was 5%. Interest is payable semi-annually on January 1 and July 1. Ivanhoe has a December 31 year-end. Were the bonds issued at a premium or a discount? Why? Prepare an amortization schedule for the first three interest payments. Prepare the journal entry to record the first interest payment on July 1, 2021. Prepare...
On January 1, 2020, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The...
On January 1, 2020, JWS Corporation issued $600,000 of 7% bonds, due in 10 years. The bonds were issued for $559,231, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 8%. No. Date Account Titles and Explanation Debit Credit (a) (b) (c)
On January 1 a company issued and sold a $400,000, 7%, 10 year bond payable, and...
On January 1 a company issued and sold a $400,000, 7%, 10 year bond payable, and received cash proceeds of $396,000. Interest is payable each December 31. The company uses the straight line method to amortize the discount. The journal entry to record the first interest payment is: A. debit to bond interest expense of $28,000, credit to cash of $28,000 B. debit to bond interest expense of $28,400, credit to cash of $28,000, credit to discount on bonds payable...
Cougar Corp. sold 2-year, 5%, $200,000, bonds on January 1, 2020 for $208,000. Interest is paid...
Cougar Corp. sold 2-year, 5%, $200,000, bonds on January 1, 2020 for $208,000. Interest is paid semi-annually on June 30 and December 31. 2 points What is the journal entry to record the issuance of the Bond on 1/1/2020? 8 points: Complete the amortization schedule below. Period ended Cash Paid Interest expense amortization Carrying amount 06/30/2020 12/31/2020 06/30/2021 12/31/2021
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT