Marin Company uses the Marin Company issued 588000 of 10 20y

Marin Company uses the Marin Company issued $588,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1 effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, -38,548. If no entry is required, select-No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indent when amount is entered. Do not indent manually.) (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 Date Account Titles and Explanation Debit Credit 12/31/17

Solution

Date Account Title and Explanation Debit Credit 1/1/17 Cash (588000 * 102%) 599760 Bonds payable 588000 Premium on bonds payable 11760 7/1/17 Interest expense [ $599760 × 9.7705% × (6/12)] 29300 Premium on bonds payable 100 Cash [$588,000 × 10% × (6/12)] 29400 12/31/17 Interest expense   [ $599660 × 9.7705% × (6/12)] 29295 Premium on bonds payable 105 Interest payable 29400 Carrying amount of bonds at July 1, 2017 Carrying amount of bonds at January 1, 2017 599760 Amortization of bond premium [$29,400 - $29,300] (100) Carrying amount of bonds at July 1, 2017 599660