Exercise 1411 On January 1 2017 Larkspur Inc sold 14 bonds h

Exercise 14-11 On January 1, 2017, Larkspur Inc. sold 14% bonds having a maturity value of $830,000 for $922,027, which provides the bondholders with a 11% yield. The bonds are dated January 1, 2017 and mature on January 1, 2022, with interest payable on January 1 of each year. The company follows IFRS and uses the effective interest method. Prepare the journal entry at the date of issue. (Round answers to 0 decimal places, e-9s,255, Credit account tities are automatically indented when the amount is entered. Do not indent manually, Ir no entry is required, select \"No Entry\" for the account titles and enter O for the amounts.) Prepare a schedule of interest expense and bond amortization for 2017 through 2020. (Round answers to decimal places, e.g.5,275.) Schedule of Interest Expense and Bond Premium Amortization Effective Interest Method Prepare the journal entries to record the interest payment and the amortization for 2017. (Round answers to 0 decimal places, e.g. S,275. Credit account tities are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select \"No Entry for the account titles and enter O for the amounts.) Prepare the journal entries to record the interest payment and the amortization for 2019. (Round answers to 0 decimal places, e.g. 5,275, Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select \"No Entry for the account titles and enter O for the amounts.)

Solution

1. journal entry on the date of issue Date Account Title Debit Credit Jan.1, 2017 Cash 922027 Bonds payable 830000 Premium on bonds 92027 2. Credit Debit Debit Carrying Date Cash Interest Bonds amount of Expense Payable bonds 1/1/2017 922027 1/1/2018 116200 97795 18405 903622 1/1/2019 116200 97795 18405 885216 1/1/2020 116200 97795 18405 866811 1/1/2021 116200 97795 18405 848405 1/1/2022 116200 97795 18405 830000 3. Journal entry to record interest payment and amortization for 2017       Date Account Title Debit Credit Dec.31, 2017 Interest Expense 97795 Bonds payable 18405 Interest Payable 116200 (Interest on bonds for the year recorded) Jan.1, 2018 Interest Payable 116200 Cash 116200 (Payment of interest recorded) 4. Journal entry to record interest payment and amortization for 2019       Date Account Title Debit Credit Dec.31, 2019 Interest Expense 97794 Bonds payable 18406 Interest Payable 116200 (Interest on bonds for the year recorded) Jan.1, 2020 Interest Payable 116200 Cash 116200 (Payment of interest recorded)