Reference no: EM132878933
Problem - The fiscal year of Russell Inc., a manufacturer of acoustical supplies, ends December 31. Selected transactions for the period 2011 through 2018, involving bonds payable issued by Russell Inc., are as follows:
2011
June 30. Issued $2,000,000 of 25-year, 7% callable bonds dated June 30, 2011, for cash of $1,920,000. Interest is payable semiannually on June 30 and December 31.
Dec. 31. Paid the semiannual interest on the bonds.
Dec. 31. Recorded straight-line amortization of $1,600 of discount on the bonds.
Dec. 31. Closed the interest expense account.
2012
June 30. Paid the semiannual interest on the bonds.
Dec. 31. Paid the semiannual interest on the bonds.
Dec. 31. Recorded straight-line amortization of $3,200 of discount on the bonds.
Dec. 31. Closed the interest expense account.
2018
June 30. Recorded the redemption of the bonds, which were called at 101.5. The balance in the bond discount account is $57,600 after the payment of interest and amortization of discount have been recorded. (Record the redemption only.)
Required -
1. Journalize entries to record the preceding transactions.
2. Determine the amount of interest expense for 2011 and 2012.
3. Determine the carrying amount of the bonds as of December 31, 2012.
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