Question

Coronado Co sells $ 433,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1,2021. The bonds yield 8%. On October 1 2018, Coronado buys back $ 129,900 worth of bonds for $135,900 (includes accrued interest). Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. (Round answers to O decimal places, e.g. 38,548.) Schedule of Bond Discount Amortization Effective-Interest Method Bonds Sold to Yield Cash Paid Carrying Amount of Bonds Interest Discount Amortized Date Expense 12/1/18 12/1/19 6/1/20 12/1/20 6/1/21 Difference due to rounding Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2019. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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.)

Answer 1

MATURITY VALUE OF BONDS PAYABLE = $433,000

PRESENT VALUE OF $433,000 DUE IN 8 PERIODS AT 4% = $316,389

PRESENT VALUE OF $24,000 SEMIANNUAL INTEREST = $174,917

PROCEEDS FROM SALE OF BONDS(491,306)

PREMIUM ON BONDS PAYABLE = $ 58,306

2.