Please solve this and provide solutions to answers. Thanks! Please solve this an
ID: 2541812 • Letter: P
Question
Please solve this and provide solutions to answers. Thanks! Please solve this and provide solutions to answers. Thanks! Bonds Payable Practice Problem: On December 1, 2001, Korn Co. issued its 6%, 10-year, $2,000,000 face value bonds to yield 98 plus accrued interest. Korn appropriately uses the effective-interest method for the 8%. Interest is payable on December l and June 1, On July 1, 2004, Korn reacquired the bonds at amortization of bond discounts or premiums and rounds all calculations to the nearest dollar amount. Required 1. Prepare an amortization schedule through December 1, 2004. 2. Determine the cash proceeds for the bond when issued on December 1, 2001. 3. Prepare journal entries for the following dates: A. December 1, 2001 B. December 31, 2001 (year-end) C. June 1, 2002 D. December 1, 2002 E. December 31, 2002 (year-end) F. July 1, 2004 4. Determine interest expense as shown on the income statement for 2002. 5. Show the balance sheet presentation related to the bonds as of December 31, 2002.Explanation / Answer
1.
2.
3.
4.
Interest Expense shown in the account for 2002 = $59,673+$70,059 + $10,000 = $139,732
5.
Balance in the bonds payable :
Face value = $2,000,000
Less: Bond discount = $238,454
Bond payable = $1,761,546
A B C D E F G Date Interest Interest Amortization Debit Balance Credit bal. Book Payment Expense of bond bond discount in Bonds Value of Cash(6% pa) (8% pa) Discount Payable the bonds 3.00% 4.00% 12/1/2001 258186 2000000 1741814 6/1/2002 60000 69673 9673 248513 2000000 1751487 12/1/2002 60000 70059 10059 238454 2000000 1761546 6/1/2003 60000 70462 10462 227992 2000000 1772008 12/1/2003 60000 70880 10880 217112 2000000 1782888 6/1/2004 60000 71316 11316 205796 2000000 1794204 12/1/2004 60000 71768 11768 194028 2000000 1805972 7/1/2004 5000 6020 1020 193008 2000000 1806992