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Ques 1

Date Cash received Interest expense premium or discount amo


1-Apr-18
30-Sep-18 96000 $ 83,073.57 $ 12,926.43
31-Mar-19 96000 $ 83,073.57 $ 12,926.43
30-Sep-19 96000 $ 83,073.57 $ 12,926.43
31-Mar-20 96000 $ 83,073.57 $ 12,926.43
30-Sep-20 96000 $ 83,073.57 $ 12,926.43
31-Mar-21 96000 $ 83,073.57 $ 12,926.43
30-Sep-21 96000 $ 83,073.57 $ 12,926.43
31-Mar-22 96000 $ 83,073.57 $ 12,926.43

so first of all ,
look all of this is straight lined
bond interest as well as premium

so bond interest
over the 4 years = 1600000*12%*4= 768000
this is distributed over 8 periods=768000/8= 96000

now comes the premium amortization

issue price $ 1,703,411.40


face value $ 1,600,000.00
$ 103,411.40

so over 8 periods this Is amortized = 103411.40/8= $ 12,926.43

This aside now comes the journal entries , I am doing from issuance till redemption
Ques 2
Date Account titles debit credit

1-Apr-18 Cash $ 1,703,411.40


bonds payable $ 1,600,000.00
premium on bonds payable $ 103,411.40
(to record issue of bonds)

30-Sep-18 Interest expense $ 83,073.57


premium on bonds payable $ 12,926.43
cash $ 96,000.00
(to record interest expense)

31-Dec-18 Interest expense $ 41,536.79


premium on bonds payable $ 6,463.22
interest payable $ 48,000.00
(to accrue interest expense)

31-Mar-19 Interest expense $ 41,536.79


premium on bonds payable $ 6,463.22
interest payable $ 48,000.00
cash $ 96,000.00
(to record payment of interest expense )

30-Jun-19 Interest expense $ 41,536.79


premium on bonds payable $ 6,463.22
interest payable $ 48,000.00
(to accrue interest expense)

30-Jun-19 Bonds payable $ 1,600,000.00


Interest payable $ 48,000.00
Premium on bonds payable $ 71,095.33
gain on retirement of bonds $ 23,095.33
cash(1600000*103%+48000) $ 1,696,000.00
(to record retirement of bonds)
Carrying amount of bonds
$ 1,703,411.40
$ 1,690,485
$ 1,677,559
$ 1,664,632
$ 1,651,706
$ 1,638,779
$ 1,625,853
$ 1,612,926
$ 1,600,000

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