1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries. a. Initial deposit b. The first year's interest c. The redemption of the bonds 2. On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries. a. Issued the bonds b. Paid first semiannual interest payment c. Retired the bonds at maturity

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Bishop

Business

4 March, 11:16

1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries. a. Initial deposit b. The first year's interest c. The redemption of the bonds 2. On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries. a. Issued the bonds b. Paid first semiannual interest payment c. Retired the bonds at maturity

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Answers (1)

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Alayna Burnett · Answer 1

Answers are the following:

1. a. Sinking Fund 47,000

Cash 47,000

b) Sinking Fund 3,825

Sinking Fund Interest Earned 3,825

c) Cash 17,000

Bonds Payable 400,000

Sinking Fund 417,000

2.

a) Cash 300,000

Bonds Payable 300,000

b) Bond Interest Expense 13,500

Cash 13,500

c) Bonds Payable 300,000

Cash 300,000