P-14-04 Name:

Section:

Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Round your answers to nearest whole dollar, if required.

1. Bonds Issued at a Discount and a Premium—Effective Interest Method

2014
Jan. 1

Sold 9.2%, 10-year bonds at 98.1

Apr. 1

Sold 9.8%, 10-year bonds at 101

June 30

Paid semiannual interest on 9.2%, 10-year

bonds and amortized the discount

Sept. 30

Paid semiannual interest on 9.8%, 10-year

bonds and amortized the premium

Dec. 31

Paid semiannual interest on 9.2%, 10-year

bonds and amortized the discount

31

To record accrual of 3 months' interest

and amortization of the premium on
9.8%, 10-year bonds
 2015
Mar. 31

Paid semiannual interest on 9.8%, 10-year

bonds and amortized the premium for the
remainder of the interest period

2. Enter as per the order, provided in the journal entries.

a. Bond interest expense in 2014:

June 30
Sept. 30
Dec. 31
Dec. 31
Total

b. Total cash paid for 2014 bond issues:

June 30
Sept. 30
Dec. 31
Total
P-14-04_Sol. Name: SOLUTION
Section:

Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Round your answers to nearest whole dollar, if required.

1. Bonds Issued at a Discount and a Premium—Effective Interest Method

2014
Jan. 1 Cash 1,962,000
Unamortized Bond Discount 38,000
Bonds Payable 2,000,000
Sold 9.2%, 10-year bonds at 98.1

Apr. 1 Cash 4,040,000

Unamortized Bond Premium 40,000
Bonds Payable 4,000,000
Sold 9.8%, 10-year bonds at 101

June 30 Bond Interest Expense 93,195

Unamortized Bond Discount 1,195
Cash 92,000
Paid semiannual interest on 9.2%, 10-year
bonds and amortized the discount

Sept. 30 Bond Interest Expense 191,900

Unamortized Bond Premium 4,100
Cash 196,000
Paid semiannual interest on 9.8%, 10-year
bonds and amortized the premium

Dec. 31 Bond Interest Expense 93,252

Unamortized Bond Discount 1,252
Cash 92,000
Paid semiannual interest on 9.2%, 10-year
bonds and amortized the discount

31 Bond Interest Expense 95,853

Unamortized Bond Premium 2,147
Interest Payable 98,000
To record accrual of 3 months' interest
and amortization of the premium on
9.8%, 10-year bonds
 2015
Mar. 31 Bond Interest Expense 95,853
Interest Payable 98,000
Unamortized Bond Premium 2,147
Cash 196,000
Paid semiannual interest on 9.8%, 10-year
bonds and amortized the premium for the
remainder of the interest period

2. Enter as per the order, provided in the journal entries.

a. Bond interest expense in 2014:

June 30 $ 93,195
Sept. 30 191,900
Dec. 31 93,252
Dec. 31 95,853
Total $ 474,200

b. Total cash paid for 2014 bond issues:

June 30 $ 92,000
Sept. 30 196,000
Dec. 31 92,000
Total $ 380,000