Question

Marin Company issued $408,000 of 9%, 20-year bonds on January 1, 2020, at 101. Interest is payable semiannually on July 1 and January 1. Marin Company uses the straight-line method of amortization for bond premium or discount.

Prepare the journal entries to record the following. (If no entry is required, select "No Entry")

(a)The issuance of the bonds.

(b)The payment of interest and the related amortization on July 1, 2020.

(c)The accrual of interest and the related amortization on December 31, 2020.

Answer 1

Date	Account Titles	Debit	Credit
Jan-01	Cash	$          4,12,080		=408000/100*101
	Bonds Payable		$           4,08,000
	Premium on Bonds Payable		$                4,080	=412080-408000
	(Issue of Bonds at premium)
Jul-01	Interest Expense	$             36,618		=36720-102
	Premium on Bonds Payable	$                   102		=4080/40
	Cash		$              36,720	=408000*9%
	(Payment of semi annual interest)
Dec-31	Interest Expense	$             36,618
	Premium on Bonds Payable	$                   102
	Interest Payable		$              36,720
	(Accrual of semi annual interest)