Response to the following problem:
Selected accounts from three trial balances of the Lake Corporation at December 31 are presented below:
|
Debits
|
Adjusted
|
Unadjusted
|
|
2015
|
2016
|
2017
|
|
Interest Expense
|
$22,100
|
$44,200
|
$43,800
|
|
Credits
|
|
|
|
|
9% Bonds Payable
|
500,000
|
500,000
|
500,000
|
|
Premium on Bonds
|
23,600
|
21,200
|
20,000
|
The 9% bonds were authorized on July 1, 2015. Interest is paid semiannually on June 30 and December 31. The bonds were issued on November 1, 2015. Any premium or discount is amortized on a straight-line basis, and amortization is recorded each time the interest expense is recorded.
Required: 1. Compute the following:
a. original issue price as of November 1, 2015
b. maturity date.
2. Reconstruct the journal entry to record the issuance of the bonds on November 1, 2015.
3. Prepare any required adjusting entries as of December 31, 2017.
4. Calculate the carrying value of the bonds on December 31, 2017.