Problem 15-9A On January 1, 2017, Lock Corporation issued $3,980,000 face value,
ID: 2427842 • Letter: P
Question
Problem 15-9A
On January 1, 2017, Lock Corporation issued $3,980,000 face value, 7%, 10-year bonds at $3,712,939. This price resulted in an effective-interest rate of 8% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1.
edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni *Problem 15-9A On January 1, 2017, Lock Corporation issued $3,980,000 face value, 796, 10-year bonds at $3,712,939. This price resulted in an effective-interest rate of 8% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1 Prepare the journal entry to record the issuance of the bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date January 1, 2017 Account Titles and Explanation Debit Credit Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue. (Round answers to 0 decimal places, e.g. 15,250.) LOCK CORPORATION Bond Discount Effective-Interest Method-Annual Interest Payments nnual Interest Periods Interest to Be Paid Interest Expense to Be Recorded iscount Amortization namortized Discount Bond Carrying Value Issue date Prepare the journal entry to reco the accruaTo rest and the amortizati when amount is entered. Do not indent manually.) 3 n discount on Decembe (Round answers to U decimal places, e.g 0. Credit account titles are automatically indented Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Prepare the journal entry to record the payment of interest on January 1, 2018. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Jan. 1, 2018 Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2018. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Credit Dec. 31, 2018 Question Attempts: 0 of 3 usedExplanation / Answer
Date
Account title and explanation
Debit
Credit
January 1, 2017
Cash
$3,712,939
Discount on bond payable
$ 267,061
Bond payable
$3,980,000
Annual interest period
Interest to be paid
Interest expense to be recorded
Discount amortization
Unamortized discount
Bond carrying value
Issued date
$ 267,061
$3,712,939
1
297035.1
259905.7
37129.39
229931.6
37,50,068
2
300005.5
262504.8
37500.68
192430.9
37,87,569
3
303005.5
265129.8
37875.69
154555.2
38,25,445
Date
Account title and explanation
Debit
Credit
December 31, 2017
Interest expense
259905.70
Discount on bond payable
37129.39
Interest payable
297035.1
Date
Account title and explanation
Debit
Credit
January 1, 2018
Interest payable
$ 297035.1
Cash
$ 297035.1
Date
Account title and explanation
Debit
Credit
December 31, 2017
Interest expense
262504.8
Discount on bond payable
37500.68
Interest payable
300005.5
Date
Account title and explanation
Debit
Credit
January 1, 2017
Cash
$3,712,939
Discount on bond payable
$ 267,061
Bond payable
$3,980,000