Homework Answers
Answer:
| Date | Account title and Explanation | Debit | Credit | |
| a | Jan. 1,2020 | Cash [60,000 x 0.98] | $58,800 | |
| Discount on bonds payable | $1,200 | |||
| Bonds payable | $60,000 | |||
| [To record issuance of bonds at premium] | ||||
| b | Jan.1, 2025 | Cash | $30,000 | |
| Bonds payable | $30,000 | |||
| [To record issuance of bonds at par] | ||||
| c | Jan.1, 2025 | Bonds payable | $30,000 | |
| Loss on redemption of bonds | $1,200 | |||
| Discount on bonds payable (Unamortized)* | $300 | |||
| Cash [$30,000 x 1.03] | $30,900 | |||
| [To record redemption of half of the bonds] |
*Unamortized discount on bonds redeemed:
| Face value | $30,000 |
| Issue price [30,000 x 0.98] | ($29,400) |
| Discount on bonds payable | $600 |
| ÷ No. payments | 10 |
| = Discount amortized each year | $60 |
| Total Discount | $600 |
| (Less): Discount amortized [$60 x 5 years] | ($300) |
| Unamortized discount | $300 |
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