Question

Please show me the eqautions to how you got the numbers in the table!! On January 1, 2020, Sponsler Corporation issued $5,000,000, 7%, 20-year bonds. The bonds were sold to yield an effective-interest rate of 5%. Interest is paid semiannually on June 30 and December 31. The company uses the effective interest method of amortization. Use the table below to prepare a bond discount amortization schedule which shows the amortization of discount for the first SIX interest payment dates. (Round to the nearest dollar.) Alternatively, prepare the journal entrylies) to redeem the bond for $6,250,000 on October 1, 2022. Prepare the three required 2020 journal entries for the bond On January 1, 2020, Sponsler Corporation issued $1,000,000, 4%, 5-year bonds. The bonds were sold to yield an effective interest rate of 6%. Interest is paid quarterly on March 31, June 30, September 30, and December 31. The company uses the effective interest method of amortization. Prepare the January 1, March 30, and June 30 journal entries for 2020 (over) Prepare the journal entry to redeem the bond for $6,200,000 on January 1, 2022

Answer 1

Amount of interest (5000000*7% *6/12) (A) P.V n = 40 1 = 2.5% (B) Present Value of Interest (A *B)=(C) PV of Face Value (5000000*.37243) = (D) Issue Price of the Bonds (C+D) 175000 25.10278 4392987 1862150 6255137 Date Cash paid @7%/2 of Par Value Carrying Value Interest Expense @ 5%/2 on carrying value Amortization of premium Unamortized Premium 49 50 51 52 53 1-Jan 30-Jun 31-Dec 30-Jun 31-Dec 30-Jun 31-Dec 175,000 175,000 175,000 175,000 175,000 175,000 156,378 155,913 155,436 154,947 154,445 153,931 18,622 19,087 19,564 20,053 20,555 21,069 1,255,137 1,236,515 1,217,428 1,197,863 1,177,810 1,157,255 1,136,187 6,255,137 6,236,515 6,217,428 6,197,863 6,177,810 6,157,255 6,136,187 54 56 57

58 Journal entries 60 Debit Credit 62 6,255,137 Date Account Title & Explanation 2020 1-Jan Cash Bonds payable Premium on Bonds Payable (To record issue of Bonds at Premium) 5,000,000 1,255,137 64 65 66 156,378 18,622 30-Jun Interest expense Premium on Bonds Payable Cash (To record the Interest payment) 175,000 155,913 19,087 31-Dec Interest expense Premium on Bonds Payable Cash (To record the Interest payment) 175,000 2022 1-Jan Bonds payable Premium on Bonds Payable Loss on redemption of bonds Payable Cash (TO record redemption of bonds) 5,000,000 1,177,810 22,190 6,200,000

85 Altenatively prepare the journal enries to redeem the bonds on October 12022 2022 30-Jun Interest expense 154,445 Premium on Bonds Payable 20,555 Cash (To record the Interest payment) 175,000 91 76.966 10,534 1-Oct Interest expense (153931 *3/6) Premium on Bonds Payable (21069*3/6) Cash (To record the first Interest payment) 87,500 1-Oct Bonds payable Premium on Bonds Payable Loss on redemption of bonds Payable Cash (TO record redemption of bonds) 5,000,000 1,146,721 103,279 99 6,250,000 101 102 Note; As per rule I have answered your first question completely. 104 105 106