On January 1, 2018, Bochini Corporation sold a $10 million, 8.25 percent bond is
ID: 2549655 • Letter: O
Question
On January 1, 2018, Bochini Corporation sold a $10 million, 8.25 percent bond issue. The bonds were dated January 1, 2018, had a yield of 8 percent, pay interest each December 31, and mature 10 years from the date of issue. Use Table 9C.1, Table 9C.2
Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 4 decimal places. Enter your answers in dollars not in millions rounded to the nearest whole dollar.)
On January 1, 2018, Bochini Corporation sold a $10 million, 8.25 percent bond issue. The bonds were dated January 1, 2018, had a yield of 8 percent, pay interest each December 31, and mature 10 years from the date of issue. Use Table 9C.1, Table 9C.2
On January 1, 2018, Bochini Corporation sold a $10 million, 8.25 percent bond issue. The bonds were dated January 1, 2018, had a yield of 8 percent, pay interest each December 31, and mature 10 years from the date of issue. Use Table 9C.1, Table 9C.2 Required 1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 4 decimal places. Enter your answers in dollars not in millions rounded to the nearest whole dollar.) View transaction list Journal entry worksheet Record the issuance of bond at a premium. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018 No journal entry required Bond interest expense Bonds payable Cash Income tax expense Record entry View general journalExplanation / Answer
Answer 1. Table Value Based on n= 10.00 i= 8% Cash Flow Amount Present Value Interest - $10,000,000 X 8.25% 825,000.00 5,535,816 ($825,000 X 6.71008) Principal 10,000,000.00 4,631,900 ($10,000,000 X 0.46319) Issue Price of Note 10,167,716 Premium on issue of Note 167,716 Bond Premium Amortization Schedule Date Cash Interest Paid - $10,00,000 X 8.25% Period Interest Expense - Preceeding Bond Carrying Value X 8% Premium Amortization Unamortized Premium Bonds Carrying Amount A B C = A-B D = D - C E = $10,000,000 + D 1/1/2018 - - - 167,716 10,167,716 31-Dec-18 825,000 813,417 11,583 156,133 10,156,133 Answer 1 & 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1/1/2018 Cash 10,167,716 Bonds Payable 10,000,000 Premium on Issue of Bonds Payable 167,716 (To record the isuue of Bonds at premium) 31-Dec-18 Interest Expense 813,417 Premium on Issue of Bonds Payable 11,583 Cash 825,000 (To record the interest paid) Answer 3. BOCHINI CORPORATION Income Statement For the Year Ended Dec 31, 2018 Other Income or Expenses Interest Expense 813,417 BOCHINI CORPORATION Balance Sheet Dec 31, 2018 Liabilities Long Term Liabilities Bonds Payable 10,000,000 Premium on issue of Bonds Payable 156,133 10,156,133