The board of directors of Carlie Services Inc authorized the

The board of directors of Carlie Services Inc. authorized the issuance of $300,000 face value, 20-year, 7 percent bonds dated April 1, 2016, and maturing on April 1, 2036. Interest is payable semiannually on April 1 and October 1. Cloud uses the calendar year as its fiscal year. The bond transactions that occurred in 2016 and 2017 follow.

  

DATE

TRANSACTIONS FOR 2016

  Apr.

1

Issued $210,000 of bonds at face value.

  Oct.

1

Paid the semiannual interest on the bonds issued.

  Dec.

31

Recorded the adjusting entry for the accrued bond interest.

31

Closed the Bond Interest Expense account to the Income Summary account.

  

DATE

TRANSACTIONS FOR 2017

  Jan.

1

Reversed the adjusting entry made on December 31, 2016.

  Apr.

1

Issued $90,000 of bonds at face value.

1

Paid the interest for six months on the bonds previously issued.

  Oct.

1

Paid the interest for six months on the outstanding bonds.

  Dec.

31

Recorded the adjusting entry for the accrued bond interest.

31

Closed the Bond Interest Expense account to the Income Summary account.

   

Record the transactions in general journal form.

Issued $210,000 of bonds at face value.

Paid the semiannual interest on the bonds issued.

Recorded the adjusting entry for the accrued bond interest.

Closed the Bond Interest Expense account to the Income Summary account.

Reversed the adjusting entry made on December 31, 2016.

Issued $90,000 of bonds at face value.

Paid the interest for six months on the bonds previously issued.

Paid the interest for six months on the outstanding bonds.

Recorded the adjusting entry for the accrued bond interest.

Closed the Bond Interest Expense account to the Income Summary account.

Analyze:

Based on the transactions given, what is the balance in the Bonds Payable account on December 31, 2016?

The board of directors of Carlie Services Inc. authorized the issuance of $300,000 face value, 20-year, 7 percent bonds dated April 1, 2016, and maturing on April 1, 2036. Interest is payable semiannually on April 1 and October 1. Cloud uses the calendar year as its fiscal year. The bond transactions that occurred in 2016 and 2017 follow.

Solution

1-Apr-16 Cash 210000 Bonds payable 210000 1-Oct-16 Bond interest expense (210000*7%*1/2) 7350 Cash 7350 31-Dec-16 Bond interest expense (210000*7%*1/4) 3675 Interest payable 3675 31-Dec-16 Income summary 11025 Bond interest expense 11025 1-Jan-17 Interest payable 3675 Bond interest expense 3675 1-Apr-17 Cash 90000 Bonds payable 90000 1-Apr-17 Bond interest expense (210000*7%*1/2) 7350 Cash 7350 1-Oct-17 Bond interest expense (300000*7%*1/2) 10500 Cash 10500 31-Dec-17 Bond interest expense (300000*7%*1/4) 5250 Interest payable 5250 31-Dec-17 Income summary 15750 Interest expense 15750 BALANCE IN THE BONDS PAYABLE ACCOUNT = $300000