JOURNAL ENTRIES COMPUT

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT

PROBLEM 5-8 FAME CO PROBLEM 5-8 FAME CO

2 2020
31-Dec Cash Sales Price per set
Premium on Bonds Payable 0 No. of sets sold
Bonds Payable Sales - 2020
To record issuance

2021 0
31-Dec Bonds Payable
Interest Expense
Cash
To record payment of principal and interest Sales Price per set
0 No. of sets sold
31-Dec Premium on Bonds Payable Sales - 2020
Interest Expense
To record amortization of premium
0
2022
31-Dec Bonds Payable
Interest Expense
Cash
To record payment of principal and interest

31-Dec Premium on Bonds Payable

Interest Expense
 COMPUTATIONS JOURNAL ENTRIES
DATE ACCOUNT TITLE & EXP
Problem 5-1 SUPERSONIC CO
ROBLEM 5-8 FAME CO 2020
1-Apr Supersoni Company was
Sales Price per set 15,000 bonds with face amount
No. of sets sold 300
Sales - 2020 4,500,000 1-Apr Cash

1-Oct Interest Expense

Sales Price per set 15,000

No. of sets sold 500
Sales - 2020 7,500,000 31-Dec Interest Expense

Premium on Bonds Paya

2021
1-Jan Accrued interest Payable

1-Apr Interest Expense

1-Oct Interest Expense

31-Dec Interest Expense

Premium on Bonds Paya

 JOURNAL ENTRIES COMPUTATIONS
ACCOUNT TITLE & EXPLANATION DEBIT CREDIT
Problem 5-1 SUPERSONIC CO

Supersoni Company was authorized to issue 12%, 10-year

bonds with face amount of P7,000,000.
Face Amount 7,000,000
Cash 7,420,000 Issue Cost 106
Bonds Payable 7,000,000 Issue Price 7,420,000
Premium on Bonds Payable 420,000
To record issuance Nominal Rate 12%

Interest Expense 420,000 7M * 12% * 6/12

Cash 420,000
To record payment of semi-annual interest AMORTIZATION SCHEDULE - STRAIGHT LINE
DATE AMORTIZATION Premium Carrying Amount
Interest Expense 210,000 APR 1, 2020 420,000 7,420,000
Accrued interest Payable 210,000 Dec 31, 2020 31,500 388,500 7,388,500
To record accrued interest Dec 31, 2021 42,000 346,500 7,346,500
Dec 31, 2022 42,000 304,500 7,304,500
Premium on Bonds Payable 31,500 Dec 31, 2023 42,000 262,500 7,262,500
Interest Expense 31,500 Dec 31, 2024 42,000 220,500 7,220,500
To record amortization Dec 31, 2025 42,000 178,500 7,178,500
Dec 31, 2026 42,000 136,500 7,136,500
Dec 31, 2027 42,000 94,500 7,094,500
Accrued interest Payable 210,000 Dec 31, 2028 42,000 52,500 7,052,500
Interest Expense 210,000 Dec 31, 2029 42,000 10,500 7,010,500
To reverse accrued interest APR 1, 2030 10,500 0 7,000,000

Interest Expense 420,000

Cash 420,000 2020
To record payment of semi-annual interest Non-Current Liabilities
Bonds Payable
Interest Expense 420,000 Add: Premium on Bonds Payable
Cash 420,000 Carrying Amount
To record payment of semi-annual interest
2021
Interest Expense 210,000 Non-Current Liabilities
Accrued interest Payable 210,000 Bonds Payable
To record accrued interest Add: Premium on Bonds Payable
Carrying Amount
Premium on Bonds Payable 42,000
Interest Expense 42,000
To record amortization
 JOURNAL ENTRIES C
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT

To record payment of principal and interest

31-Dec

To record amortization of premium

7,000,000
388,500
7,388,500

7,000,000
346,500
7,346,500
COMPUTATIONS
 JOURNAL ENTRIES COMPUTATIONS
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT
Problem 5-7 WHITE CO
2020
31-Dec Cash 7,680,000 Face Amount
Discount on Bonds Payable 320,000 Issue Cost
Bonds Payable 8,000,000 Issue Price
To record issuance
Nominal Rate
2021 AMORTIZATION SCHE
31-Dec Interest Expense 1,024,000 Year
Cash 960,000 2020
Discount on Bonds Payable 64,000 2021
To record interest payment and amortization 2022
2022 2023
31-Dec Interest Expense 1,024,000 2024
Cash 960,000 2025
Discount on Bonds Payable 64,000 2026
To record interest payment and amortization 2027

Bonds Payable 1,000,000

Cash 1,000,000
To record 1st installment payment
2023 Current Liabilities
31-Dec Interest Expense 896,000 Bonds Payable
Cash 840,000 Add:
Discount on Bonds Payable 56,000 Carrying Amount
To record interest payment and amortization
Non-Current Liabilities
Bonds Payable 1,000,000 Bonds Payable
Cash 1,000,000 Add:
To record 2nd installment payment Carrying Amount

TOTAL CARRYING AMOUNT

 COMPUTATIONS

Face Amount 8,000,000

Issue Cost 96
Issue Price 7,680,000

Nominal Rate 12%

AMORTIZATION SCHEDULE - BOND OUTSTANDING METHOD
Bond Fraction Discount Interest Interest Discount on BP Carrying Amount
Outstanding Amortization Paid Expense 320,000 7,680,000
8,000,000 0.2 64,000 960,000 1,024,000 256,000 7,744,000
8,000,000 0.2 64,000 960,000 1,024,000 192,000 6,808,000
7,000,000 0.175 56,000 840,000 896,000 136,000 5,864,000
6,000,000 0.15 48,000 720,000 768,000 88,000 4,912,000
5,000,000 0.125 40,000 600,000 640,000 48,000 3,952,000
4,000,000 0.1 32,000 480,000 512,000 16,000 1,984,000
2,000,000 0.05 16,000 240,000 256,000 0 0
40,000,000 320,000 4,800,000 5,120,000

Current Liabilities 2020 2021 2022 2023 2024 2025

Bonds Payable 1,000,000 1,000,000 1,000,000 1,000,000 2,000,000
Premium on BP 64,000 56,000 48,000 40,000 32,000
Carrying Amount 936,000 944,000 952,000 960,000 1,968,000

Non-Current Liabilities 2020 2021 2022 2023 2024 2025

Bonds Payable 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 2,000,000
Premium on BP 320,000 192,000 136,000 88,000 48,000 16,000
Carrying Amount 7,680,000 6,808,000 5,864,000 4,912,000 3,952,000 1,984,000

TOTAL CARRYING AMOUNT 7,680,000 7,744,000 6,808,000 5,864,000 4,912,000 3,952,000

 2026
2,000,000
16,000
1,984,000

2026

1,984,000
 JOURNAL ENTRIES COMPUTATIO
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Face Amount
2 2020 FAME COMPANY AMORTIZATION SCHEDULE
31-Dec Cash 7,420,000 Year
Premium on Bonds Payable 420,000
Bonds Payable 7,000,000 7 2021
To record issuance 6 2022
4 2023
2021 2024
31-Dec Bonds Payable 1,000,000 2025
Interest Expense 840,000 2026
Cash 1,840,000 2027
To record payment of principal and interest

31-Dec Premium on Bonds Payable 105,000 Non-Current Liabilities

Interest Expense 105,000 Bonds Payable
To record amortization of premium Add:
Carrying Amount
2022
31-Dec Bonds Payable 1,000,000 Current Liabilities
Interest Expense 720,000 Bonds Payable
Cash 1,720,000 Add:
To record payment of principal and interest Carrying Amount

31-Dec Premium on Bonds Payable 90,000 Face Amount of Bonds Retire

Interest Expense 90,000 Amortization Rate
To record amortization of premium Annual Amortization of early
Period befor due date (yrs)
2022 Premium on BP - Bonds early
31-Dec Bonds Payable 1,000,000
Premium on Bonds Payable 30,000 Carrying Amount of Bonds Re
Loss on Retirement 20,000 Retirement Price
Cash 1,050,000 GAIN/(LOSS) on early retirem
To record retirement @ 105 due on Dec, 2024

2023 REVISED SCHEDULE - B

31-Dec Bonds Payable 1,000,000 Year
Interest Expense 480,000
Cash 1,480,000 2023
To record payment of principal and interest 2024
2025
31-Dec Premium on Bonds Payable 60,000 2026
Interest Expense 60,000 2027
To record amortization of premium

Non-Current Liabilities
Bonds Payable
Add:
Carrying Amount

Current Liabilities
Bonds Payable
Add:
Carrying Amount
 COMPUTATIONS
Face Amount 7,000,000 Nominal Rate 12%
AMORTIZATION SCHEDULE - BOND OUTSTANDING METHOD
Bond PREMIUM Interest Interest Premium on BP Carrying Amount
Outstanding Amortization Paid Expense 420,000 7,420,000
7,000,000 105,000 840,000 735,000 315,000 6,315,000
6,000,000 90,000 720,000 630,000 225,000 5,225,000
5,000,000 75,000 600,000 525,000 150,000 4,150,000
4,000,000 60,000 480,000 420,000 90,000 3,090,000
3,000,000 45,000 360,000 315,000 45,000 2,045,000
2,000,000 30,000 240,000 210,000 15,000 1,015,000
1,000,000 15,000 120,000 105,000 0 0
28,000,000 420,000 3,360,000 2,940,000

Non-Current Liabilities 2021 2022-BR 2022-AR

Bonds Payable 5,000,000 4,000,000 3,000,000 4,000,000
Premium on Bonds Payable 225,000 150,000 135,000 195,000
Carrying Amount 5,225,000 4,150,000 3,135,000 4,195,000

Current Liabilities 2021 2022-BR 2022-AR

Bonds Payable 1,000,000 1,000,000 1,000,000
Premium on Bonds Payable 90,000 75,000 60,000
Carrying Amount 1,090,000 1,075,000 1,060,000

Face Amount of Bonds Retired Early 1,000,000

Amortization Rate 1.50%
Annual Amortization of early retired bonds 15,000
Period befor due date (yrs) 2
Premium on BP - Bonds early retired 30,000

Carrying Amount of Bonds Retired Early 1,030,000

Retirement Price 1,000,000 105 1,050,000
GAIN/(LOSS) on early retirement (20,000)

REVISED SCHEDULE - BOND OUTSTANDING METHOD

ORIGINAL PREMIUM Revised Interest Interest Premium on BP Carrying Amount
Amortization CANCELLED Amortization Paid Expense 195,000 4,195,000
75,000 15,000 60,000 480,000 420,000 135,000 3,135,000
60,000 15,000 45,000 360,000 315,000 90,000 3,090,000
45,000 45,000 360,000 315,000 45,000 2,045,000
30,000 30,000 240,000 210,000 15,000 1,015,000
15,000 15,000 120,000 105,000 0 0
225,000 30,000 195,000 1,560,000 1,365,000

Non-Current Liabilities 2023 2024 2025 2026

Bonds Payable 3,000,000 2,000,000 1,000,000
Premium on Bonds Payable 135,000 45,000 15,000
Carrying Amount 3,135,000 2,045,000 1,015,000

Current Liabilities 2023 2024 2025 2026

Bonds Payable 1,000,000 1,000,000 1,000,000
Premium on Bonds Payable 45,000 30,000 15,000
Carrying Amount 1,045,000 1,030,000 1,015,000
 JOURNAL ENTRIES COMPUTA
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Face Amount
2020 FAME COMPANY AMORTIZATION SCHED
31-Dec Year

2021
To record issuance 2022
2023
2021 2024
31-Dec 2025
2026
2027
To record payment of principal and interest

31-Dec

To record amortization of premium

2022
31-Dec

To record payment of principal and interest

31-Dec

To record amortization of premium

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Face Amount of Bonds Re
2022 Amortization Rate
31-Dec Annual Amortization of ea
Period befor due date (yr
Premium on BP - Bonds e

To record retirement @ 105 due on Dec, 2024 Carrying Amount of Bond

Retirement Price
2023 GAIN/(LOSS) on early reti
31-Dec
REVISED SCHEDULE
Year
To record payment of principal and interest
2023
31-Dec 2024
2025
To record amortization of premium 2026
2027
 REVISED SCHEDULE
Year
2022
2023
2024
2025
2026
2027

Liabilities
Bonds Payable
Add: Premium on BP
Carrying Amount
 COMPUTATIONS
Face Amount 7,000,000 Nominal Rate 12%
AMORTIZATION SCHEDULE - BOND OUTSTANDING METHOD
Bond PREMIUM Interest Interest
Outstanding Amortization Paid Expense
7,000,000 105,000 840,000 735,000
6,000,000 90,000 720,000 630,000
5,000,000 75,000 600,000 525,000
4,000,000 60,000 480,000 420,000
3,000,000 45,000 360,000 315,000
2,000,000 30,000 240,000 210,000
1,000,000 15,000 120,000 105,000
28,000,000 420,000 3,360,000 2,940,000

Face Amount of Bonds Retired Early 1,000,000

Amortization Rate 1.50%
Annual Amortization of early retired bonds 15,000
Period befor due date (yrs) 2
Premium on BP - Bonds early retired 30,000

Carrying Amount of Bonds Retired Early 1,030,000

Retirement Price 1,000,000 105 1,050,000
GAIN/(LOSS) on early retirement (20,000)

REVISED SCHEDULE - BOND OUTSTANDING METHOD

ORIGINAL PREMIUM Revised Interest Interest Premium on BP
Amortization CANCELLED Amortization Paid Expense 0
75,000 15,000 60,000 480,000 420,000
60,000 15,000 45,000 360,000 315,000
45,000 45,000 360,000 315,000
30,000 30,000 240,000 210,000
15,000 15,000 120,000 105,000
225,000 30,000 195,000 1,560,000 1,365,000
 REVISED SCHEDULE - BOND OUTSTANDING METHOD
ORIGINAL PREMIUM Revised Interest Interest Premium on BP Carrying Amount
Amortization CANCELLED Amortization Paid Expense 195,000 4,195,000
75,000 15,000 60,000 480,000 420,000
60,000 15,000 45,000 360,000 315,000
45,000 45,000 360,000 315,000
30,000 30,000 240,000 210,000
15,000 15,000 120,000 105,000
225,000 30,000 195,000 1,560,000 1,365,000
2023 2024 2025
Liabilities CURRENT NONCURRENT CURRENT NONCURRENT CURRENT NONCURRENT
Bonds Payable
Add: Premium on BP
Carrying Amount
 JOURNAL ENTRIES COMPUTATIO
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT
2020 FAME COMPANY
1-Jan Cash 7,600,000 Face Amount
Bonds Payable - FV 7,600,000 Issue Cost
To record issuance @ FV option Issue Price

1-Jan Bond Issue Cost 150,000

Cash 150,000 Face Amount
To record pament of bond issue cost Nominal Rate
Interest Expense
31-Dec Interest Expense 800,000
Cash 800,000 Initial Carrying Amount
To record payment of interest Fair Value @ Dec 31, 2020

31-Dec Loss on credit risk - OCI 150,000

Loss from change in FV 650,000 LOSS on change in FV
Bonds Payable - FV 800,000 Loss attributable to CREDIT R
To record increase in FV Loss - Market Interest Rate (

JOURNAL ENTRIES COMPUTATIO

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT
2020 MARIEL CO
1-Jan

To record issuance @ FV option Issue Price

1-Jan

To record pament of bond issue cost

Interest Expense
31-Dec
Initial Carrying Amount
To record payment of interest

31-Dec
LOSS on change in FV

To record increase in FV
 COMPUTATIONS

Face Amount 8,000,000

Issue Cost 95
Issue Price 7,600,000

Face Amount 8,000,000

Nominal Rate 10%
Interest Expense 800,000

Initial Carrying Amount 7,600,000

Fair Value @ Dec 31, 2020
Face Amount 8,000,000
Fair Value 105 8,400,000
LOSS on change in FV (800,000)
Loss attributable to CREDIT RISK (OCI) (150,000)
Loss - Market Interest Rate (P/L) (650,000)

COMPUTATIONS

Issue Price

Interest Expense

Initial Carrying Amount

LOSS on change in FV
 JOURNAL ENTRIES COMPUTATIO
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Face Amount
2020 CLAN COMPANY Nominal Rate
1-Jan Cash 2,738,682
Discount on Bonds Payable 261,318 AMORTI
Bonds Payable 3,000,000 Year
To record issuance
1-Jan-20
30-Jun Interest Expense 273,868 30-Jun-20
Discount on Bonds Payable 33,868 31-Dec-20
Cash 240,000 30-Jun-21
To record payment of interest and amortization 31-Dec-21
30-Jun-22
31-Dec Interest Expense 277,255 31-Dec-22
Discount on Bonds Payable 37,255
Cash 240,000
To record payment of interest and amortization

2021 NONCURRENT LIABILITIES

30-Jun Interest Expense 280,981 Bonds Payable
Discount on Bonds Payable 40,981 Less:
Cash 240,000 CARRYING AMOUNT
To record payment of interest and amortization

31-Dec Interest Expense 285,079

Discount on Bonds Payable 45,079
Cash 240,000 CURRENT LIABILITIES
To record payment of interest and amortization Bonds Payable
Less:
2022 CARRYING AMOUNT
30-Jun Interest Expense 289,586
Discount on Bonds Payable 49,586
Cash 240,000
To record payment of interest and amortization

31-Dec Interest Expense 294,549

Discount on Bonds Payable 54,549
Cash 240,000
To record payment of interest and amortization

31-Dec Bonds Payable 3,000,000

Cash 3,000,000
To record retirement of bonds
 COMPUTATIONS
Face Amount 3,000,000
Nominal Rate 16% Effective Rate 20%

AMORTIZATION SCHEDULE
Interest Interest Discount Carrying
Paid Expense Amortization Amount
8% 10% 2,738,682
240,000 273,868 33,868 2,772,550
240,000 277,255 37,255 2,809,805
240,000 280,981 40,981 2,850,786
240,000 285,079 45,079 2,895,864
240,000 289,586 49,586 2,945,451
240,000 294,549 54,549 3,000,000

NONCURRENT LIABILITIES 2020

Bonds Payable 3,000,000
DISCOUNT ON BONDS PAYABLE 190,195
CARRYING AMOUNT 2,809,805

CURRENT LIABILITIES 2021

Bonds Payable 3,000,000
DISCOUNT ON BONDS PAYABLE 104,136
CARRYING AMOUNT 2,895,864
 JOURNAL ENTRIES COMPUTATIO
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Face Amount
2020 CLAN COMPANY Nominal Rate
1-Apr Cash 2,101,520
Premium on Bonds Payable 101,520 AMORTIZ
Bonds Payable 2,000,000 Year
To record issuance
1-Apr-20
1-Oct Interest Expense 105,076 1-Oct-20
Premium on Bonds Payable 14,924 1-Apr-21
Cash 120,000 1-Oct-21
To record payment of interest and amortization 1-Apr-22
1-Oct-22
31-Dec Interest Expense 60,000 1-Apr-23
Accrued interest Payable 60,000
To record accrued interest
NONCURRENT LIABILITIES
Premium on Bonds Payable 7,835 Bonds Payable
Interest Expense 7,835 Add:
To record amortization CARRYING AMOUNT

2021
1-Jan Accrued interest Payable 60,000
Interest Expense 60,000
To reverse accrued interest

1-Apr Interest Expense 120,000

Cash 120,000
To record payment of semi-annual interest

1-Apr Premium on Bonds Payable 7,835

Interest Expense 7,835
To record amortization

1-Oct Interest Expense 103,546

Premium on Bonds Payable 16,454
Cash 120,000
To record payment of interest and amortization

31-Dec Interest Expense 60,000 NONCURRENT LIABILITIES

Accrued interest Payable 60,000 Bonds Payable
To record accrued interest Less:
CARRYING AMOUNT
Premium on Bonds Payable 8,638
Interest Expense 8,638
To record amortization
 COMPUTATIONS
Face Amount 2,000,000
Nominal Rate 12% Effective Rate 10%

AMORTIZATION SCHEDULE
Interest Interest Premium Carrying
Paid Expense Amortization Amount
6% 5% 2,101,520
120,000 105,076 14,924 2,086,596
120,000 104,330 15,670 2,070,926
120,000 103,546 16,454 2,054,472
120,000 102,724 17,276 2,037,196
120,000 101,860 18,140 2,019,055
120,000 100,945 19,055 2,000,000

NONCURRENT LIABILITIES 2020

Bonds Payable 2,000,000
PREMIUM ON BONDS PAYABLE 78,761
CARRYING AMOUNT 2,078,761

NONCURRENT LIABILITIES 2021

Bonds Payable 2,000,000
PREMIUM ON BONDS PAYABLE 45,834
CARRYING AMOUNT 2,045,834