question archive On January 1, 2021, Zschech Co
On January 1, 2021, Zschech Co
Subject:AccountingPrice:2.84 Bought3
On January 1, 2021, Zschech Co. issued P4,000,000, 10%, five-year bonds payable. Interest is payable every December 31, and the bonds were issued to yield 12%. The bonds were dated January 1, 2021. 1. Compute for the issuance price of the bonds. Prepare the journal entry for the issuance as well. 2. Prepare an amortization table for the bonds. Prepare the journal entry for the payment of interest on December 31, 2021. 3. How much is the amortization of the discount or premium of the bonds in 2021? 4. How much is the unamortized discount or premium of the bonds on December 31, 2022? 5. Suppose the bonds were issued on March 1, 2021. How much cash did Zschech receive upon the issuance of the bonds? b. Prepare the journal entry for the issuance of the bonds, and the payment of interest on December 31, 2021. a.
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| 1 | |||||
| Face Value | 4,000,000 | 0.56743 | 2,269,708 | ||
| Interest | 400,000 | 3.60478 | 1,441,910 | ||
| 3,711,618 | |||||
| Date | General Journal | Debit | Credit | ||
| Jan 1, 2021 | Cash | 3,711,618 | |||
| Discount on bonds payable | 288,382 | ||||
| Bonds payable | 4,000,000 | ||||
| 2 | |||||
| Payment Date | Int. Payment | Interest Exp. | Amortization of bond discount | Carrying Value | |
| Jan 1, 2021 | 3,711,618 | ||||
| Dec 31, 2021 | 400,000 | 445,394 | 45,394 | 3,757,013 | |
| Dec 31, 2022 | 400,000 | 450,842 | 50,842 | 3,807,854 | |
| Dec 31, 2023 | 400,000 | 456,942 | 56,942 | 3,864,797 | |
| Dec 31, 2024 | 400,000 | 463,776 | 63,776 | 3,928,572 | |
| Dec 31, 2025 | 400,000 | 471,428 | 71,428 | 4,000,000 | |
| Dec 31, 2021 | Interest Expense | 445,394 | |||
| Discount on bonds payable | 429,394 | ||||
| Cash | 16,000 | ||||
| 3 | Amortization of Dsicount of the bonds in 2021 | 45,394 | |||
| 4 | Unamortization of Dsicount of the bonds in 2022 | 192,146 |
