Problem 10-9A Wempe Co. sold $3,393,000, 8%, 10-year bonds on January 1, 2014. T
ID: 2470279 • Letter: P
Question
Problem 10-9A
Wempe Co. sold $3,393,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.
No.
Date
Account Titles and Explanation
Debit
Credit
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Annual
Interest
Periods
Interest to
Be Paid
Interest Expense
to Be Recorded
Premium
Amortization
Unamortized
Premium
Bond
Carrying Value
Annual
Interest
Periods
Interest to
Be Paid
Interest Expense
to Be Recorded
Premium
Amortization
Unamortized
Premium
Bond
Carrying Value
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LINK TO TEXT
No.
Date
Account Titles and Explanation
Debit
Credit
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WEMPE Co.
Balance Sheet (Partial)
December 31, 2014
WEMPE Co.
Balance Sheet (Partial)
December 31, 2014
Problem 10-9A
Wempe Co. sold $3,393,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.
Explanation / Answer
NO DR CR 1 Cash 3,393,000*1.03 3494790 Premium On issue of bond 101790 Bond payable 3393000 2 Cash 3,393,000*.93 3155490 Discount On Issue 237510 Bond payable 3393000 1 Annual Interest Periods Interest to Be Paid Interest Expense Premium Amortization Unamortized Premium Bond Carrying Value January 1, 2014 0 0 101790 3494790 1 271440 261261 10179 91611 3484611 2 271440 261261 10179 81432 3474432 3 271440 261261 10179 71253 3464253 2 Annual Interest Periods Interest to Be Paid Interest Expense Discount Amortization Unamortized Premium Bond Carrying Value January 1, 2014 0 0 237510 3155490 1 271440 247689 23751 213759 3179241 2 271440 247689 23751 190008 3202992 3 271440 247689 23751 166257 3226743 4 271440 247689 23751 142506 3250494 1 DR CR Interest expense 261261 Premium on Bond Amortization 10179 Interest Payable 271440 2 Interest expense 247689 Disocunt On Bond 23751 Interest Payable 247689 WEMPE Co. Balance Sheet (Partial) December 31, 2014 Long term Laibilities Bond Payable 3393000 Add Amortization On Bond payable 91611 3484611 2 WEMPE Co. Balance Sheet (Partial) December 31, 2014 Long term Laibilities Bond Payable 3393000 Less Discount on bond payable 213759 3179241