Question

On January 1, 2017, Spartan Corp. issued at 93, 4% bonds with a par value of $600,000, due in 5 years. Interest is payable semiannually on June 30 and December 31 of each year. In addition, Spartan incurred bond issue costs totaling $10,000. 4 years after the issue date, On January 1, 2021, Spartan calls the entire issue at 98 and cancels it. Spartan amortizes discounts/premiums, using the straight-line method.

Required:

Record the necessary journal entries on

1. January 1, 2017.
2. June 30 and December 31, 2017.
3. January 1, 2021.

Answer 1

Sporton Corp Journal Account Titten Date | Debit ($):). Credir (8) 2017 Jon Cash (600,000 1100X93) Discount on bord 4%. Bonds (Being bonds issuod) 558,000 2,000 600,000 | Bend I stuence lost - Accounts Payable (Being issue cost recorded 10,000 to in 10,000 12,000 June 30 Interest expensen (600.000X42 I intenst Payable 1 (Being inherent exponses recorded) 12,000 Il Jun 12,000 phaceat Payable Costa Alamat paid ) 12,000 12,000 Dec 31 Inbreakerponses planet Poiable 1 000 empren pecable) 12,000 12,000 Dersil interest Payable - Cash 1 (Being interest pould) 12,000 Dec 31 10,400 Income gralement Disrount on bond (42000/s) Band issuance cost (10,000/s) being east recorded) 8400 2000

2021 3600,000 Jan al 4% Bond - Cash Profil on redemption of bond Bonds recalled y 588,000 12.000 10,400 sanoi | Income Statement Bond issuance lost Discount on band (Being cost and discount written off 8,400