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Lincoln Company issued $50,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays...

Question

Lincoln Company issued $50,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays...

Lincoln Company issued $50,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays interest each January 1Journalize the payment of semiannual interest when the bonds are issued at face value. Date Accounts Debit Credit 2018 Jul. 1Journalize the payment of semiannual interest when the bonds are issued at 96. Date Accounts Debit Credit 2018 Jul. 1Requirement 3. Journalize Lincoln Companys issuance of the bonds and first semiannual interest payment assuming the bonds weRequirement 4. Which bond price results in the most interest expense for Lincoln? Explain in detail. The results in the most

Lincoln Company issued $50,000 of 10-year, 8% bonds payable on January 1, 2018. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The company can issue its bonds payable under various conditions. Read the requirements. Requirement 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. (Record debits first, then credits. Exc i Requirements Journalize the issuance of the bond payable at face value. Date Accounts 2018 | Jan. 1 II 1. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 96. Explanations are not required. 3. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 106. Explanations are not required. 4. Which bond price results in the most interest expense for Lincoln Company? Explain in detail. Journalize the payment of semiannual interest when the bonds are i Date Accounts
Journalize the payment of semiannual interest when the bonds are issued at face value. Date Accounts Debit Credit 2018 Jul. 1 Requirement 2. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 96. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries.) Journalize the issuance of the bond payable at 96. Date Accounts Debit Credit 2018
Journalize the payment of semiannual interest when the bonds are issued at 96. Date Accounts Debit Credit 2018 Jul. 1
Requirement 3. Journalize Lincoln Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 106. Explanations are not required. (Record debits first, then credits. Exclude explanations from any journal entries.) Journalize the issuance of the bond payable at 106. Date Accounts Debit Credit 2018 Jan. 1 Journalize the payment of semiannual interest when the bonds are issued at 106. Date Accounts Debit Credit
Requirement 4. Which bond price results in the most interest expense for Lincoln? Explain in detail. The results in the most interest expense. The must be amortized over the life of the bond, resulting in interest expense the amount of interest actually paid.

Answers

1) Date Accounts Debit Credit
2018 Cash 50,000
1-Jan Bonds payable 50,000
7/1/2018 interest expense 2000
cash 2000
2) Date Accounts Debit Credit
1/1/2018 Cash 48000
Discount on bonds 2000
Bonds payable 50,000
7/1/2018 interest expense 2,100
discount on bonds 100
cash 2000
3) Date Accounts Debit Credit
1/1/2018 Cash 53000
premium on bonds 3000
bonds payable 50,000
7/1/2018 interest expense 1850
premium on bonds 150
cash 2,000
4) the discount/$96    results in the most interest expense .The discount must
be amortized over the life of the bond resulting in interest expense
more than the amount of interest actually paid


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