Straight-Line Method MacBride Enterprises sold $200,000, 9% bonds for $206,457 on December 31, 2013. The bonds...
Straight-Line Method
MacBride Enterprises sold $200,000, 9% bonds for $206,457 on December 31, 2013. The bonds pay semi-
annual interest each June 30 and December 31 and mature December 31, 2018.
1. Record the issuance of the bonds on December 31, 20
2. If MacBride uses the straight-line amortization method to record bond amortization and interest
expense, what entry would they make at the first interest payment on June 30, 2014?
3. Complete the bond amortization table below (Straight-line method)
| Period | Cash payment for interest (credit) | Interest Expense (Debit) | Premium on Bonds Payable (Debit) | Balance in the premium on bonds payable account | carrying value of the bonds (face +balance in premium account) |
| 6/30/2014 | |||||
| 12/31/2014 | |||||
| 6/30/2015 | |||||
| 12/31/2015 | |||||
| 6/30/2016 | |||||
| 12/31/2016 | |||||
| 6/30/2017 | |||||
| 12/31/2017 | |||||
| 6/30/2018 | |||||
| 12/31/2018 |
Effective Interest Method
MacBride Enterprises sold $200,000, 9% bonds for $206,457 on December 31, 2013. The bonds pay semi-
annual interest each June 30 and December 31 and mature December 31, 2018. The effective interest rate on
the bonds is 8.2%
4. Record the issuance of the bonds on December 31, 2013.
5. If MacBride uses the effective interest amortization method to record bond amortization and interest
expense, what entry would they make at the first interest payment on June 30, 2014?
6. What entry would be made at the second interest payment date on December 31, 2014?
| Period | cash payment for interest (credit) | interest expense (debit) | premium on bonds payable (debit) | balance in the premium on bonds payable account | carrying values of the bonds (face + balance in premium account) |
| 6/30/2014 | |||||
| 12/31/2014 | |||||
| 6/30/2015 | |||||
| 12/31/2015 | |||||
| 6/30/2016 | |||||
| 12/31/2016 | |||||
| 6/30/2017 | |||||
| 12/31/2017 | |||||
| 6/30/2018 | |||||
| 12/31/2018 |
Homework Answers
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Straight-Line Method
MacBride Enterprises sold $200,000, 9% bonds for $206,457 on
December 31, 2013. The bonds...
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Required:
Complete the below table to record the company's journal entry.
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1.
Prepare the journal entry to record their issuance by...
Exercise 14-9
On June 30, 2017, Vaughn Company issued $4,500,000 face value of
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Prepare the journal entries to record the following
transactions. (Round answer to 0 decimal places, e.g.
38,548. If no entry is required, select "No Entry" for the account
titles and enter 0 for the amounts. Credit...
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