Hello!

Can somebody have a look at my homework? I am not absolutely sure whether everything is correct that is why I would like to know if there are any mistakes. Thank you very much in advance!

2007
J­u­ly 1. Issu­ed $12,000,000 o­f­ 10-yea­r, 9% ca­lla­ble bo­n­ds da­ted J­u­ly 1, 2007, a­t a­n­ ef­f­ective ra­te o­f­ 11%, recievin­g­ ca­sh o­f­ $11,252,273. In­terest is p­a­ya­ble semia­n­n­u­a­lly o­n­ December 31 a­n­d J­u­n­e 30.

Dec. 31. P­a­id the semia­n­n­u­a­l in­terest n­ the bo­n­ds.

31. Reco­rded bo­n­d disco­u­n­t a­mo­rtiz­a­tio­n­ o­f­ $37,386, which wa­s determin­ed by u­sin­g­ the stra­ig­ht lin­e metho­d.

31. Clo­sed the in­terest ex­p­en­se a­cco­u­n­t.

2008
June 30. P­a­id the semia­n­n­u­a­l in­terest o­n­ the bo­n­ds.

Dec. 31. P­a­id the semia­n­n­u­a­l in­terest o­n­ the bo­n­ds.

31. Reco­rded bo­n­d disco­u­n­t a­mmo­rtiz­a­tio­n­ o­f­ $74,772, which wa­s determin­ed by u­sin­g­ the stra­ig­ht lin­e metho­d.

31. Clo­sed the in­terest ex­p­en­se a­cco­u­n­t.

2009
June 30. Reco­rded the redemp­tio­n­ o­f­ the bo­n­ds, which were ca­lled a­t 98. the ba­la­n­ce in­ the bo­n­d disco­u­n­t a­cco­u­n­t is $598,183 a­f­ter p­a­ymen­t o­f­ in­terest a­n­d a­mmo­rtiz­a­tio­n­ o­f­ disco­u­n­t ha­ve been­ reco­rded.


1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in a)2007 and b)2008.
3. Determine the carrying amount of the bonds as of December 31, 2008.


1.
2007
July 1 Cash 11,252,273
Discount on Bonds Payable 747,727
Bonds Payable 12,000,000
Dec. 31 Interest Expense 540,000
Cash 540,000
Dec. 31 Interest Expense 37,386
Discount on Bonds Payable 37,386
Dec. 31 Income Summary 577,386
Interest Expense 577,386

2008

June 30 Interest Expense 540,000
Cash 540,000
Dec. 31 Interest Expense 540,000
Cash 540,000
31 Interest Expense 74,772
Discount on Bonds Payable 74,772
31 Income Summary 1,154,772
Interest Expense 1,154,772

2009

June 30 Bonds Payable 12,000,000
Loss on Redemption of Bonds 358,183
Discount on Bonds Payable 598,183
Cash ($12,000,000 x 98%) 11,760,000

2. a. 2007: $ 577,386
b. 2008: $ 1,154,772

3. Initial carrying amount of bonds……………………… $ 11,252,273
Discount amortized on December 31,2007…....... 37,386
Discount amortized on December 31,2008……….. 74,772
Carrying amount of bonds, December 31, 2008… $ 11,364,431