Homework SourseExase T55 Insficae how each of th s shousd be classified in
Exase T55 Insficae how each of th s shousd be classified in the financial statements ?4-3 (LOI, Entries fur Bund Transactions, rmwrted below arvtwo independent satunnos I. On January 1, 2017, Simon Company issued s200,000 of 10-year bonds at pas levnterest is payable quarterty on Apra i 2. On June 1. 2017, Garfunkel Company issued $100.000 of 12%, 10-year bondls dlated January 1 at par plus accrued inene July I. October I, and January 1 Intenest is payable semiannually on July 1 amd January 1 For each of these two independent situations, prepare journa journal entries to record the following ta) The issuance of the bonds (b) The payment of interest on July 1. ic) The accrual of interest on December 31 bonds on January 1,2017, at 1 t issued 56o00,000 of 10%20-year bually on July 1 and January 1. Dion Company uses the straight-line method of amortication for bond premium or discount Instruetions Prepare the journal entries to record the following (a) The issuance of the bonds. b) The payment of interest and the related amortization on July 1, 2017 (c) The accrual of interest and the related amortization on December 31, 2017 E14-5 (LO1) EXCEL (Entries for Bond Transactions- Effective-Interest) that Celine Dion Company uses the effective-interest method of amortization for bond premium or discount. Assume an tive yield of 9.7705%. Assume the same information as in E144 effec- Instructions Prepare the journal entries to record the following (Round to the nearest dollar.) (a) The issuance of the bonds. (b) The payment of interest and related amortization on July 1, 2017 (c) The accrual of interest and the related amortization on December 31, 2017 E14-6 (LO1) (Amortization Schedule-Straight-Line) Devon Harris Company sells 10% bonds having a maturity va of $2,000,000 for $1,855,816. The bonds are dated January 1, 2017, and mature January 1, 2022 Interest is payable annu on January 1 Instructions Set up a schedule of interest expense and discount amortization under the straight-line method.(Round answers to the neares 14-7 (LO1) (Amortization Schedule-Effective-Interest) Assume the same information as E14-6 structions t up a schedule of interest expense and discount amortization under the effective-interest method. (Hint: The effectiv e must be computed.) -8 (LO1) GROUPWORK (Determine Proper Amounts in Account Balances) Presented below are two it ations. 2017, and pay interest on July 1 and January 1. If Gershwin uses the straight-line method to amortize bon to be reported on July 1,2017, and December 31, 201 (a) George Gershwin Co. sold $2.000000 of 10%, 10-year bonds at 104 on January 1,2017. The bonds were dat 
Solution
E14-5 Bond 600,000 Semi annual Interest @10% 30,000 (600000*10%/2) Effective Interest Rate 9.7705% Semi annual interset 4.88525% (9.7705/2) PV of interest payment $ 522,964 =PV(4.88525%,40,-30000,0,0) pv of prinicipal repayment $ 89,038 =600,000*((1+.0488525)^(-40)) Fair Value of Bond $ 612,002 Premium on issue 12,002 (612,002-600,000) 01-Jan Cash 612,002 Bond Payable $ 600,000 Premium on bond payable 12,002 01-Jul Interest Expense $ 29,897.83 Premium on bond payable 102.17 Cash 30,000 31-Dec Interest expense 29,892.84 Premium on bond payable 107.16 Interest payable 30,000 Amortization table A B C D E F G Date Interset payment (5%*600000) Interest expense 4.88525%*Previous book value in G Amortization of bond Premium(B-C) Credit balance in Premium account (Previous balance-amortization) Credit balance in bonds payable account Book value of bonds F+E 01-01-17 12,002 $ 600,000 612,002 01-07-17 30,000 29,897.83 102.17 11,899.86 $ 600,000 611,900 01-01-18 30,000 29,892.84 107.16 11,792.70 $ 600,000 611,793 01-07-18 30,000 29,887.60 112.40 11,680.30 $ 600,000 611,680 01-01-19 30,000 29,882.11 117.89 11,562.41 $ 600,000 611,562 01-07-19 30,000 29,876.35 123.65 11,438.76 $ 600,000 611,439 01-01-20 30,000 29,870.31 129.69 11,309.07 $ 600,000 611,309 01-07-20 30,000 29,863.98 136.02 11,173.05 $ 600,000 611,173 01-01-21 30,000 29,857.33 142.67 11,030.38 $ 600,000 611,030 01-07-21 30,000 29,850.36 149.64 10,880.74 $ 600,000 610,881 01-01-22 30,000 29,843.05 156.95 10,723.80 $ 600,000 610,724 01-07-22 30,000 29,835.38 164.62 10,559.18 $ 600,000 610,559 01-01-23 30,000 29,827.34 172.66 10,386.52 $ 600,000 610,387 01-07-23 30,000 29,818.91 181.09 10,205.43 $ 600,000 610,205 01-01-24 30,000 29,810.06 189.94 10,015.49 $ 600,000 610,015 01-07-24 30,000 29,800.78 199.22 9,816.27 $ 600,000 609,816 01-01-25 30,000 29,791.05 208.95 9,607.32 $ 600,000 609,607 01-07-25 30,000 29,780.84 219.16 9,388.16 $ 600,000 609,388 01-01-26 30,000 29,770.14 229.86 9,158.30 $ 600,000 609,158 01-07-26 30,000 29,758.91 241.09 8,917.20 $ 600,000 608,917 01-01-27 30,000 29,747.13 252.87 8,664.33 $ 600,000 608,664 01-07-27 30,000 29,734.77 265.23 8,399.11 $ 600,000 608,399 01-01-28 30,000 29,721.82 278.18 8,120.92 $ 600,000 608,121 01-07-28 30,000 29,708.23 291.77 7,829.15 $ 600,000 607,829 01-01-29 30,000 29,693.97 306.03 7,523.13 $ 600,000 607,523 01-07-29 30,000 29,679.02 320.98 7,202.15 $ 600,000 607,202 01-01-30 30,000 29,663.34 336.66 6,865.49 $ 600,000 606,865 01-07-30 30,000 29,646.90 353.10 6,512.39 $ 600,000 606,512 01-01-31 30,000 29,629.65 370.35 6,142.03 $ 600,000 606,142 01-07-31 30,000 29,611.55 388.45 5,753.59 $ 600,000 605,754 01-01-32 30,000 29,592.58 407.42 5,346.17 $ 600,000 605,346 01-07-32 30,000 29,572.67 427.33 4,918.84 $ 600,000 604,919 01-01-33 30,000 29,551.80 448.20 4,470.64 $ 600,000 604,471 01-07-33 30,000 29,529.90 470.10 4,000.54 $ 600,000 604,001 01-01-34 30,000 29,506.94 493.06 3,507.47 $ 600,000 603,507 01-07-34 30,000 29,482.85 517.15 2,990.32 $ 600,000 602,990 01-01-35 30,000 29,457.58 542.42 2,447.91 $ 600,000 602,448 01-07-35 30,000 29,431.09 568.91 1,879.00 $ 600,000 601,879 01-01-36 30,000 29,403.29 596.71 1,282.29 $ 600,000 601,282 01-07-36 30,000 29,374.14 625.86 656.43 $ 600,000 600,656 01-01-37 30,000 29,343.57 656.43 (0.00) $ 600,000 600,000