tink5281
Feb 18, 2009, 04:17 PM
I cannot figure this one out....I have been working on this problem alone for 2 weeks and am hoping that someone can help me figure out the missing piece to it:
2007
July 1. Issued $19,000,000 of seven year, 12% callable bonds dated July 1, 2007, at an effective rate of 10%, receiving cash of $20,880,780. Interest is payable semiannually on December 31 and June 30.
DR Cash 20,880,780
CR Premium on Bonds Payable 1,880,780
CR Bonds Payable 19,000,000
Dec. 31 Paid the semiannual interest on the bonds
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Recorded bond premium amortization of $134,341, which was determined by using the straight-line method.
DR Interest Expense 134,341
CR Premium on Bonds Payable 134,341
Dec. 31 Closed the interest expense account.
DR Income Summary 1,274,341
CR Interest Expense 1,274,341
2008
June. 30 Paid the semiannual interest on the bonds.
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Paid the semiannual interest on the bonds.
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Recorded bond premium amortization of $268,682, which was determined by using the straight-line method.
DR Interest Expense 268,682
CR Premium on Bonds Payable 268,682
Dec. 31 Closed the interest expense account.
DR Income Summary 2,548,682
CR Interest Expense 2,548,682
2009
July 1 Recorded the redemption of the bonds, which were called at 101.5. The balance in the bond premium account is $1,343,416 after the payment of interest and amortization of premium have been recorded. (Record the redemption only)
DR Bonds Payable 19,000,000
DR Premium on Bonds Payable 1,343,416
CR Gain on Redemption of Bonds 1,058,416
CR Cash 19,285,000
I am off by a total of 806,046 on both a credit and a debit but cannot figure out what I am missing.
I will be so appreciative not only for your time but your help in getting the missing piece...Im going crazy!!!:confused:
2007
July 1. Issued $19,000,000 of seven year, 12% callable bonds dated July 1, 2007, at an effective rate of 10%, receiving cash of $20,880,780. Interest is payable semiannually on December 31 and June 30.
DR Cash 20,880,780
CR Premium on Bonds Payable 1,880,780
CR Bonds Payable 19,000,000
Dec. 31 Paid the semiannual interest on the bonds
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Recorded bond premium amortization of $134,341, which was determined by using the straight-line method.
DR Interest Expense 134,341
CR Premium on Bonds Payable 134,341
Dec. 31 Closed the interest expense account.
DR Income Summary 1,274,341
CR Interest Expense 1,274,341
2008
June. 30 Paid the semiannual interest on the bonds.
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Paid the semiannual interest on the bonds.
DR Interest Expense 1,140,000
CR Cash 1,140,000
Dec. 31 Recorded bond premium amortization of $268,682, which was determined by using the straight-line method.
DR Interest Expense 268,682
CR Premium on Bonds Payable 268,682
Dec. 31 Closed the interest expense account.
DR Income Summary 2,548,682
CR Interest Expense 2,548,682
2009
July 1 Recorded the redemption of the bonds, which were called at 101.5. The balance in the bond premium account is $1,343,416 after the payment of interest and amortization of premium have been recorded. (Record the redemption only)
DR Bonds Payable 19,000,000
DR Premium on Bonds Payable 1,343,416
CR Gain on Redemption of Bonds 1,058,416
CR Cash 19,285,000
I am off by a total of 806,046 on both a credit and a debit but cannot figure out what I am missing.
I will be so appreciative not only for your time but your help in getting the missing piece...Im going crazy!!!:confused: