# Comprehensive Bond Problem

Please explain how you get answers and don't use PV in Excel. Attached also are PV tables.

2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The

bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds

yield 5% On October 1, 2011, Douglas Company buys back $720,000

worth of the bonds for $738,000 (includes accrued interest). Give the entries through

December 31, 2012.

Jun 1, 10 Cash Amount

Bonds Payable 2,400,000

Premium on Bonds Payable Amount

Maturity value of bonds payable $2,400,000

Present value of $2,400,000 due in 8 periods at 2.5% Formula

Present value of interest payable semiannually Formula

Proceeds from sale of bonds Formula

Premium on bonds payable Formula

Dec 1, 10 Interest Expense Amount

Account Title Amount

Cash [$2,400,000 * 6.00% * (6/12)] 72,000

Note: Amortization table is semi-annual, interest rate is stated as annual value.

Dec 31, 10 Account title Amount

Account title Amount

Account title Amount

Jun 1, 11 Account Title Amount

Account Title Amount

Account Title Amount

Account Title 21,600

Oct 1, 11 Account title Amount

Account title Amount

Account title Amount

Oct 1, 11 Account title Amount

Account title Amount

Account title Amount

Account title Amount

Net carrying amount of bonds redeemed - Par value 720,000

Unamortized premium Amount

Formula

Reacquisition price Amount

Gain on redemption Formula

Dec 1, 11 Account title Amount

Account title Amount

Account title Amount

Dec 31, 11 Account title Amount

Account title Amount

Account title Amount

Jun 1, 12 Account title Amount

Account title Amount

Account title Amount

Account title Amount

Dec 1, 12 Account Amount

Account Amount

Account Amount

Schedule of Bond Discount Amortization

Effective Interest Method

6% Bonds Sold to Yield 5%

Date "Cash

Paid" "Interest

Expense" "Bond

Premium" "Carrying

Value

of Bonds"

Jun 1, 10 Amount

Dec 1, 10 Formula Formula Formula Formula

Jun 1, 11 Formula Formula Formula Formula

Dec 1, 11 Formula Formula Formula Formula

Jun 1, 12 Formula Formula Formula Formula

Dec 1, 12 Formula Formula Formula Formula

Jun 1, 13 Formula Formula Formula Formula

Dec 1, 13 Formula Formula Formula Formula

Jun 1, 14 Formula Formula Formula Formula.

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2. Bell Company sells $2,400,000 of 6% bonds on June 1, 2010. The

bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds

yield 5% On October 1, 2011, Douglas Company buys back $720,000

worth of the bonds for $738,000 (includes accrued interest). Give the entries through

December 31, 2012.

Jun 1, 10 Cash 2,486,042

Bonds Payable 2,400,000

Premium on Bonds Payable 86,042

Maturity value of bonds payable $2,400,000

Present value of ...

#### Solution Summary

The solution explains the comprehensive bond problem and provides an answer.