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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 12-3LESSON 12-3
Bonds Payable Transactions
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LESSON 12-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ISSUING BONDSISSUING BONDS page 356
1. Record the issuance of the bonds.
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LESSON 12-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Balance Owed on Bond Issue
Bond Interest Rate
=AnnualInterest×
$250,000.00 12% = $30,000.00×
2. Record the payment of the interest.
1. Calculate the annual interest.
PAYING INTEREST ON BONDSPAYING INTEREST ON BONDS page 356
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LESSON 12-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
1. Record the initial payment to the bond sinking fund.
DEPOSITING CASH IN A DEPOSITING CASH IN A BOND SINKING FUNDBOND SINKING FUND page 357
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LESSON 12-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Amount of Increase in Sinking Fund
Interest Earned During Year
=Amount to be
Deposited–
$50,000.00 $2,000.00 = $48,000.00–
2. Record the payment to the bond sinking fund.
1. Calculate the amount to be deposited in the fund.
DEPOSITING CASH TO SINKING FUND DEPOSITING CASH TO SINKING FUND AND RECORDING INCOME EARNEDAND RECORDING INCOME EARNED page 357
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LESSON 12-3CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
July 1, 20X4. Received notice from bond trustee that bond issue was retired using bond sinking fund, $250,000.00. Memorandum No. 600.
Bonds Payable
Retired 250,000.00 Balance 250,000.00(New Bal. zero)
Bonds Sinking Fund
Balance 250,000.00(New Bal. zero)
Retired 250,000.00
RETIRING A BOND ISSUERETIRING A BOND ISSUE page 358
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