1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 12-3 Bonds Payable Transactions

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 12-3 ISSUING BONDS page 356 1.Record the issuance of the bonds. 1

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 12-3 Balance Owed on Bond Issue Bond Interest Rate = Annual Interest × $250,000.0012%=$30,000.00 × 2.Record the payment of the interest. 1.Calculate the annual interest. PAYING INTEREST ON BONDS page 356 1 2

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 12-3 1.Record the initial payment to the bond sinking fund. DEPOSITING CASH IN A BOND SINKING FUND page 357 1

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 12-3 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 AND RECORDING INCOME EARNED page 357 1 2

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 12-3 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 Retired250,000.00Balance250,000.00 (New Bal. zero) Bonds Sinking Fund Balance250,000.00 (New Bal. zero) Retired250,000.00 RETIRING A BOND ISSUE page 358

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 12-3 TERMS REVIEW bond bond issue trustee bond sinking fund retiring a bond issue term bonds serial bonds page 360