PLEASE PROVIDE ME WITH CORRECT SOLUTIONS THIS HOMEWORK IS GR

PLEASE PROVIDE ME WITH CORRECT SOLUTIONS. THIS HOMEWORK IS GRADED. THANK YOU IN ADVANCE :)

On June 1, 2017 the Diamond Bottle Company sold $400,00o in long-term bonds to the Silver Jewelry Company. The bonds will mature in 10 years and have a stated interest rate of 9%. The market rate at time of issuance was 12%. Therefore, the bonds sold for $332,196. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method. Below is a partial bond amortization schedule. Cash Interest Amortization Carrying ense Value 6/1/2017 5/31/201836,000 5/31/201 9,864 0,3 0,846 86 4,327 846 332,196 36,060 0,38 2 6,000 1/2020 36,000 Diamond Bottle company\'s year end is 12/31. What amount of interest expense should Diamond Bottle Company report at the end of December 31, 2017? If Diamond Bottle Company buys back 50% of the bonds at 101 plus accrued interest on December 31, 2018 What is the amount of total cash paid out when the bonds are recalled? What is the gain/loss reported on the retirement of bonds? (be sure to include the $ amount and note gain or loss)

Solution

1)Number of Months expired Till31 december 2017 : 1June -31 december 2017 = 7months

Interest expense for the year ending 31December 2017 : 39864*7/12 = $ 23254

2)

Adjustment Entry that will made for interest accrued till December 31,2018

Discount on Bond payable :400000-332196=67804

Balance In Discount On Bond payable :67804-3864(2017 amortised)-2524.08 ( for 7 months of 2018)= 61415.92

A)Total cash paid : 212500

B)Loss on retirement :32707.96

Date	Account	Debit	credit
December31 ,2018	Interest expense [40327*7/12]	23524.08
	Discount on Bond payable [4327*7/12]		2524.08
	Interest payable [36000*7/12]		21000
	[Being interest accrued on all bonds till 31 december 2018]