1. (1 point) On January 1, 2014, Peter Co. issued 6% bonds with a face value of $450,000 when the market interest rate was 4%. The bonds are due in seven years and interest is payable every June 30

1. (1 point)

On January 1, 2014, Peter Co. issued 6% bonds with a face value of $450,000 when the market interest rate was 4%.

The bonds are due in seven years and interest is payable every June 30 and December 31. The effective interest

method is used to amortize any bond premium or discount.

Required: Calculate the selling price of the bonds and indicate the associated accounts and dollar amounts to be

reported on the Income Statement for the year ended December 31, 2015, and on the December 31, 2015, Balance

Sheet. Round all amounts to the nearest dollar.

Selling Price: $_______________________

Account Name ($)

Income Statement: _______________________ ____________

Balance Sheet: _______________________ ____________

2. (1 point)

On January 1, 2014, Piper Co. issued 7% bonds with a face value of $700,000 for $671,612 when the market rate of

interest was 8%. Interest is payable on June 30 and December 31, and the effective interest method is used to

amortize the bond discount. The December 31, 2016, balance sheet of Piper Co. included the following items:

Bonds payable, due December 31, 2018 $700,000

Unamortized discount on bonds payable 12,704

On April 1, 2017, Piper retired all of the bonds at 96 plus accrued interest.

Required: Prepare the necessary journal entries for the April 1, 2017, bond retirement.

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Chapter 14:
Extra Credit Homework Opportunity (Spring 2014)
Name (Print): ___________________________
1. (1 point)
On January 1, 2014, Peter Co. issued 6% bonds with a face value of $450,000 when the market interest rate was 4%.
The bonds are due in seven years and interest is payable every June 30 and December 31.
The effective interest
method is used to amortize any bond premium or discount.
Required:
Calculate the selling price of the bonds and indicate the associated accounts and dollar amounts to be
reported on the Income Statement for the year ended December 31, 2015, and on the December 31, 2015, Balance
Sheet.
Round all amounts to the nearest dollar.
Selling Price:
$
______________________
_
Account Name
($)
Income Statement:
______________________
_
____________
Balance Sheet:
_______________________
____________
2. (1 point)
On January 1, 2014, Piper Co. issued 7% bonds with a face value of $700,000 for $671,612 when the market rate of
interest was 8%.
Interest is payable on June 30 and December 31, and the effective interest method is used to
amortize the bond discount.
The December 31, 2016, balance sheet of Piper Co. included the following items:
Bonds payable, due December 31, 2018
$700,000
Unamortized discount on bonds payable
12,704
On April 1, 2017, Piper retired all of the bonds at 96 plus accrued interest.
Required:
Prepare the necessary journal entries for the April 1, 2017, bond retirement.
NOTE:
Remember to staple the paper(s) on which you did the work to this sheet.
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