Question

On June 30, 2020, Kingbird Company issued $3,120,000 face value of 15%, 20-year bonds at $3,824,160, a yield of 12%. Kingbird uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry")

(1)The issuance of the bonds on June 30, 2020.

(2)The payment of interest and the amortization of the premium on December 31, 2020.

(3)The payment of interest and the amortization of the premium on June 30, 2021.

(4)The payment of interest and the amortization of the premium on December 31, 2021.

Answer 1

credit | Answer A Journal entries: Date I particulary Debit June 30 cash Ale dr $3824,160 20201 To bonds payable To premium on bondy payable $3120000 $704,160 2020 Dec 31 Interest expense Alc ar $229,450 120 (124/2 x 3824760) Premium on bondy payable Ale dr|$4550 To cash 15%/2 x 3120000) |$234.000 o $234000 5 92 June 30 Interest expense Alc ar $229, 177 2021 | 12%/2x(3824,160-4550) Premium on bonds payable Ale dr $4823 to cash (15%/2x3129000) (4) Dec 31 Interest expense Al ar $228,887 2021 12%/2 x(3824,160–4550-4823) Premium on bonds payable Al dr $5,113 to cash (15%/2x3129000) $ 234000