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Problem 10.6A Amortization of a Bond Discount and...

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Problem 10.6A Amortization of a Bond Discount and Premium L.O. 5, 6 On September 1, 2011, Park Rapids Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year-end. The company's fiscal year ends at December 31. a.1 Prepare the necessary adjusting entries at December 31, 2011, and the journal entry to record the payment of bond interest on March 1, 2012, under the bonds were issued at 98 (Do not round intermediate calculations and round your final answers to nearest dollar amount. Omit the "$" sign in your response): Date General Journal Debit Credit Dec. 31, 2011 (Click to select)InventoryCapital stockNotes payablePremium on bonds payableCashBond interest payableDiscount on bonds payableBond interest expense (Click to select)Premium on bonds payable Bond interest payableDiscount on bonds payableCapital stockInventoryCashNotes payableBond interest expense (Click to select)Premium on bonds payable Bond interest payableInventoryNotes payableCashDiscount on bonds payableBond interest expenseCapital stock Mar. 1, 2012 (Click to select)Notes payableBond interest payablePremium on bonds payableInventoryDiscount on bonds payableCashBond interest expenseCapital stock (Click to select)InventoryDiscount on bonds payableNotes payableCapital stockCashBond interest expensePremium on bonds payableBond interest payable (Click to select)Bond interest expenseBond interest payablePremium on bonds payableDiscount on bonds payableInventoryCapital stockNotes payableCash (Click to select)Bond interest payableCashPremium on bonds payableNotes payableInventoryBond interest expenseDiscount on bonds payableCapital stock -------------------------------------------------------------------------------- a.2 Prepare the necessary adjusting entries at December 31, 2011, and the journal entry to record the payment of bond interest on March 1, 2012, under the bonds were issued at 101 (Do not round intermediate calculations and round your final answers to nearest dollar amount. Omit the "$" sign in your response): Date General Journal Debit Credit Dec. 31, 2011 (Click to select)Bond interest expenseCashBond interest payableInventoryPremium on bonds payableCapital stockNotes payableDiscount on bonds payable (Click to select)Notes payableBond interest payableBond interest expenseInventoryCashDiscount on bonds payableCapital stockPremium on bonds payable (Click to select)InventoryBonds interest expenseDiscount on bond payableCapital stockCashNotes payableBond interest payablePremium on bonds payable Mar. 1, 2012 (Click to select)InventoryBond interest payableNotes payableBond interest expenseDiscount on bonds payablePremium on bonds payableCapital stockCash (Click to select)Notes payableInventoryCashBond interest payablePremium on bonds payableBond interest expenseCapital stockDiscount on bonds payable (Click to select)CashDiscount on bonds payableInventoryNotes payableBond interest expenseBond interest payableCapital stockPremium on bonds payable (Click to select)CashDiscount on bonds payableNotes payablePremium on bonds payableCapital stockInventoryBond interest payableBonds interest expense -------------------------------------------------------------------------------- b. Compute the net bond liability at December 31, 2012, under assumptions 1 and 2 above. (Round intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response): Net bond liability Bonds Issued at 98 $ Bonds Issued at 101 $

 

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