P15.

9A Prepare entries to record issuance of bonds, payment of interest, and amortization of bond premiu
On January 1, 2020, Lock Corporation issued $1,800,000, 5%, 10-year bonds at $1,667,518. This price re
of 6% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The b
on January 1.

Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2020.
(b) Prepare an amortization table through December 31, 2022 (3 interest periods), for this bond issue.
(c ) Prepare the journal entry to record the accrual of interest and the amortization of the discount on Dece
(d) Prepare the journal entry to record the payment of interest and the amortization of the premium on Ja
(e ) Prepare the journal entry to record the accrual of interest and the amortization of the discount on Dece
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

2020
(a) Jan. 1 Account
Account
Account

(b) LOCK CORPORATION

Bond Discount Amortization
Effective-Interest Method -Annual Interest Payments
5% Bonds Issued at 6%
(A) (B) (C ) (D)
Discount Unamortized
Annual Interest to Interest Amortization Discount
Interest Period Be Paid Expense (B ) - (A) (D) - (C )
Issue date $132,482
1 $90,000 ? ? ?
2 90,000 ? ? ?
3 90,000 ? ? ?

2020
(c ) Dec 31 Account
Account
Account

2021
(d) Jan 1 Account
Account
(e ) Dec 31 Account
Account
Account

After you have completed the requirements of P15.9A, consider the additional question.
Answers are on the other tab in this file.
1. Assume the term of the bonds is 5 years, semi-annual interest with an issue date of July 1, 2020 at 10
a face of $2,000,000, and cash proceeds from sale of $2,162,210 and an effective interest rate of 8%
Revise the amortization schedule and all journal entries as appropriate for the period through Dec. 31, 2023.
st, and amortization of bond premium using effective interest method
bonds at $1,667,518. This price resulted in an effective-interest rate
e bond premium or discount. The bond pays annual interest

anuary 1, 2020.
est periods), for this bond issue.
mortization of the discount on December 31 2020.
amortization of the premium on January 1, 2021.
mortization of the discount on December 31, 2021.
umber or a formula in cells with a "?" .

Value
Value
Value

yments

(E )
Bond Carrying
Value
($1,800,000 -D)
$1,667,518
?
?
?

Value
Value
Value

Value
Value
 Value
Value
Value

ditional question.

an issue date of July 1, 2020 at 10%,

and an effective interest rate of 8%.
or the period through Dec. 31, 2023.