P15-5A Prepare entries to record issuance of bonds, payment of interest, and amortization of

On July 1, 2014, Flanagin Corporation issued $2,000,000, 10%, 10-year bonds at $2,271,813.
of 8% on the bonds. Flanagin uses the effective-interest method to amortize bond premium o
July 1 and January 1.

Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2014.
(b) Prepare an amortization table through December 31, 2015 (3 interest periods), for this b
(c ) Prepare the journal entry to record the accrual of interest and the amortization of the pre
(d) Prepare the journal entry to record the payment of interest and the amortization of the p
assuming no accrual of interest on June 30.
(e ) Prepare the journal entry to record the accrual of interest and the amortization of the pre
NOTE: Enter a number in cells requesting a value; enter either a number or a form

2014
(a)

July 1

Cash
Premium on Bond
Payable

(b)

Semi-annual
Interest Periods
Issue date
1
2
3

(c )

Dec 31

FLANAGIN CORPORATION
Bond Premium Amortization
Effective-Interest Method -Semiannual Interest Payments
10% Bonds Issued at 8%
(A)
(B)
(C )
Premium
Interest to
Interest
Amortization
Be Paid
Expense
(A ) - (B)
$100,000
100,000
100,000

90,873
90,507
90,128

9,127
9,493
9,872

Bond Interest Expense

Premium on Bond Payable
Account

2015

(d)

July 1

(e ) Dec 31

Bond Interest Expense

Premium on Bond Payable
Bond Interest

Bond Interest Expense

Premium on Bonds Payable
Bond Interest

After you have completed the requirements of P15-5A, consider the additional question.
Answers are on the other tab in this file.
1.
Assume the term of the bonds changed to 5 years and the cash proceeds from sale chan
Revise the amortization schedule and all journal entries as appropriate.

ment of interest, and amortization of bond premium using effective interest method
10%, 10-year bonds at $2,271,813. This price resulted in an effective-interest rate
method to amortize bond premium or discount. The bond pays semiannual interest

e bonds on July 1, 2014.

2015 (3 interest periods), for this bond issue.
rest and the amortization of the premium on December 31 2014.
terest and the amortization of the premium on July 1, 2015,

rest and the amortization of the premium on December 31, 2015.

enter either a number or a formula in cells with a "?" .

2014
2,271,813
2,000,000
271,813

ORATION
ortization
nnual Interest Payments
ed at 8%
(D)
(E )
Unamortized
Bond Carrying
Premium
Value
(D) - (C )
($2,000,000 +D)
$271,813
$2,271,83
262,686
2,262,686
253,193
2,253,193
243,321
2,243,321

2015

90,873
9,127
100,000

90,507
9,493
100,000

90,128
9,872
100,000

nsider the additional question.

d the cash proceeds from sale changed to $2,162,210 .

s appropriate.

P15-5B Prepare entries to record issuance of bonds, payment of interest, and amortization
On July 1, 2014, Witherspoon satellites issued $4,500,000, 9%, 10-year bonds at $4,219,60
rate of 10% on the bonds. Witherspoon uses the effective-interest method to amortize bon
interest July 1 and January 1.

Instructions
(Round all computations to the nearest dollar.)
(a)
Prepare the journal entry to record the issuance of the bonds on July 1, 2014.
(b)
Prepare an amortization table through December 31, 2015 (3 interest periods), f
(c )
Prepare the journal entry to record the accrual of interest and the amortization o
(d)
Prepare the journal entry to record the payment of interest and the amortization
assuming that interest was not accrued on June 30.
(e )
Prepare the journal entry to record the accrual of interest and the amortization o
NOTE: Enter a number in cells requesting a value; enter either a number or a for

2014
(a)

July 1

(b)

WITHERSPOON SATELLITES
Bond Discount Amortization
Effective-Interest Method- Semiannual Interest Paymen
9% Bonds issued at 10%

Semi-annual
Interest Periods
Issue date
1
2
3

(c )

Cash
Premium on Bond
Bonds Payable

Dec. 31

(A)

(B)

Interest to
Be Paid

Interest
Expense

202,500
202,500
202,500

?
?
?

Account
Account
Account

2015
(d)

July 1

Account

Account
Account

(e )

Dec. 31

Account
Account
Account

After you have completed the requirements of P15-5B, consider the additional question.
Answers are on the other tab in this file.
1.
Assume the term of the bonds changed to 5 years and the cash proceeds from s
Revise the amortization schedule and all journal entries as appropriate.

, payment of interest, and amortization of bond discount using effective-interest method

00,000, 9%, 10-year bonds at $4,219,600. This price resulted in an effective-interest
ffective-interest method to amortize bond premium or discount. The bonds pay semiannual

suance of the bonds on July 1, 2014.

ecember 31, 2015 (3 interest periods), for this bond issue.
ccrual of interest and the amortization of the discount on December 31, 2014.
ayment of interest and the amortization of the discount on July 1, 2015,
on June 30.
ccrual of interest and the amortization of the discount on December 31, 2015.
alue; enter either a number or a formula in cells with a "?" .

2014
4,219,600
4,500,000

s Payable

-280,400

WITHERSPOON SATELLITES
ond Discount Amortization
t Method- Semiannual Interest Payments
9% Bonds issued at 10%
(C )
Discount
Amortization
(B ) - (A)
?
?
?

(D)
(E )
Unamortized Bond Carrying
Discount
Value
(D) - (C )
($4,500,000 -D)
$280,400
?
?
?

$4,219,600
?
?
?

Value

nt
nt

Value
Value

2015
Value

nt
nt

nt
nt

Value
Value

Value
Value
Value

5B, consider the additional question.

o 5 years and the cash proceeds from sale changed to $4,326,245.

urnal entries as appropriate.

emiannual

P15-7B Prepare entries to record issuance of bonds, interest accrual, and straight-line amo
Fernetti Company sold $6,000,000, 9%, 20-year bonds on January 1, 2014. The bonds wer
and pay interest on January 1 and July 1. Fernetti Company uses the straight-line method
or discount. The bonds were sold at 96. Assume no interest is accrued on June 30.

Instructions
(a)
Prepare the journal entry to record the issuance of the bonds on January 1, 2014.
(b)
Prepare a bond discount amortization schedule for the first 4 interest periods.
(c ) Prepare the journal entries for interest and the amortization of the discount in 2014 a
(d)
Show the balance sheet presentation of the bond liability at December 31, 2015.
NOTE: Enter a number in cells requesting a value; enter either a number or a for

(a)

Jan 1

Cash
Discount on Bonds Payable
Bonds Payable

(b)

Semi-annual
Interest Periods
Issue date
1
2
3
4

Fernetti Company
Bond Discount Amortization
Straight-Line Method -Semiannual Interest Payments
$6,000,000, 9%, 20 years
(A)
(B)
Interest
Interest to
Expense
Be Paid
(A) +(C )
270,000
270,000

276,000
276,000

270,000
270,000

276,000
276,000

2014

(c)
July 1

Account
Account
Account

Dec. 31

Bond Interest Payable

Account
Account

2015

(d)

Jan. 1

Bond Interest Payable

Account

July 1

Bond Interest Payable

Account
Account

Dec. 31

Bond Interest Payable

Account
Account

Current Liabilities
Interest Payable
Long-term Liabilities
Bonds payable due 2033
Less: Discount on bonds payable

6,000,000
216,000

After you have completed the requirements of P15-7B, consider the additional question.
Answers are on the other tab in this file.
1.
Assume the bonds sold at 98. Revise the amortization schedule and all journal
entries as appropriate.

st accrual, and straight-line amortization for 2 years

anuary 1, 2014. The bonds were dated January 1, 2014,
y uses the straight-line method to amortize bond premium
st is accrued on June 30.

e bonds on January 1, 2014.

e first 4 interest periods.
ization of the discount in 2014 and 2015.
bility at December 31, 2015.
nter either a number or a formula in cells with a "?" .

5,760,000
240,000

ble

6,000,000

netti Company
ond Discount Amortization
d -Semiannual Interest Payments
$6,000,000, 9%, 20 years
(C )
(D)
(E )
Discount
Unamortized
Bond Carrying
Amortization
Discount
Value
($240,000 40)
(D) - (C )
($6,000,000 -D)
$240,000
$5,760,000
6,000
234,000
5,526,000
6,000
228,000
5,298,000
6,000
6,000

222,000
216,000

5,076,000
4,860,000
Value
Value

Value
Value

Value

276,000
Value
Value

276,000
Value
Value

$276,000

sider the additional question.

n schedule and all journal

3,840,000

156,000 3,844,000
152,000