Chapter 3 – Bonds Payable

Assignment

Bonds Payable

Bonds issued at a Premium

1. StillGoing Corporation issued 1,000, 4.2% bonds (face value of each bond is $1,000) at

105.4956 on December 31, 2019. The bonds are due on December 31, 2024, with an

interest payment due on December 31st of each year during the 5-year term. The market

rate at the time of the bond issuance was 3%. StillGoing uses the effective interest method

for amortization.

Prepare the journal entries related to this bond for each year (2019 – 2024).

2. On January 1, 2018, Mighty Company issued a bond with a face value of $600,000 and a

stated interest rate of 5%. The bond was issued at 97.291. The bond matures in three

years (December 31, 2020) and pays interest every June 30 and December 31, starting

June 30, 2018. When the bond was issued, the annual market rate of interest was 6%.

Mighty uses the effective-interest amortization method.

Prepare the journal entries related to this bond for each year (2018 – 2020
3. On January 1, 2017, Houston Company issued a $250,000, 5% bond at 103.63. The bond

matures on December 31, 2020 and pays interest every December 31, beginning December

31, 2017. When the bond was issued, the annual market rate of interest was 4%. Houston

uses the effective-interest amortization method.

Prepare the journal entries related to this bond for each year (2017 – 2020)