gnment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXTI Bri

gnment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXTI Brief Exercise 14-3 The Stellar Company issued $220,000 of 8% bonds on January 1, 2017. The bonds January 1. The bonds were issued at 99 are due January 1, 2022, with interest payable each July 1 and Prepare the jounal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Stellar Company records straight-line amortization semiannually. (If no entry is required, select \"No Entry\" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 declmal 1.251247 and final answer to O decimal places, e.g. 38,548.) Date Account Titles and Explanation Debit Credit (aI January 1, 2017 Version 4.24. y Policy I 2000-2018 20 hn w le.ASona inc. All Rights Reserved. A Division ofantie. Ins. A 4

Solution

Journal Entries in the books of Stellar Company

No

Date

Accounts Tittles and explanations

Debit

Credit

(a)

January 1, 2017

Cash A/c

$217,800

Discount on Bond Payable A/c

$2,200

To Bond Payable

$220,000

(b)

July 1, 2017

Interest Expenses A/c

$9,020

To Discount on Bond Payable A/c

$220

To Cash A/c

$8,800

(c)

December31,2017

Interest Expenses A/c

$9,020

To Discount on Bond Payable A/c

$220

To Cash A/c

$8,800

Bond Face Value = $220,000

Bond Issue Price = $200,000 x 0.99 = $217,800

Discount on issue of Bond = $220,000 – 217,800 = $2,200

Amortization on Discount on issue of Bond in each semi annual period

= $2,200 / 10

= $220

Cash (Semi annual Interest ob bond) = $220,000 x 4% = $8,800

No	Date	Accounts Tittles and explanations	Debit	Credit
(a)	January 1, 2017	Cash A/c	$217,800
		Discount on Bond Payable A/c	$2,200
		To Bond Payable		$220,000
(b)	July 1, 2017	Interest Expenses A/c	$9,020
		To Discount on Bond Payable A/c		$220
		To Cash A/c		$8,800
(c)	December31,2017	Interest Expenses A/c	$9,020
		To Discount on Bond Payable A/c		$220
		To Cash A/c		$8,800