Carla Vista Co. issued $478,500, 796, 15-year bonds on December 31, 2016, for $4
ID: 2511690 • Letter: C
Question
Carla Vista Co. issued $478,500, 796, 15-year bonds on December 31, 2016, for $459,360. Interest is payable annually on December 31 . Carla Vista uses the straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds (b) The payment of interest and the discount amortization on December 31, 2017. (c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded No. Date Account Titles and Explanation Debit Credit (a) Dec. 31, 2016 (b) Dec. 31, 2017 (c) Dec. 31, 2031Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Dec 31,2016 Cash 459360 Discount on bonds payable 19140 Bonds payable 478500 (To record issue bonds payable) Dec 31,2017 Interest expense 34771 Discount on bonds payable (19140/15) 1276 Cash (478500*7%) 33495 (To record interest) Dec 31,2031 Bonds payable 478500 Cash 478500 (To record redemption of bonds payable)