Question

Exercise 10-5 Straight-Line: Recording bond...

Exercise 10-5 Straight-Line: Recording bond issuance and discount amortization LO P2 Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $110,000 and semiannual interest payments. (0) (1) (2) Semiannual Period-End January 1, issuance June 30, first payment December 31, second payment Unamortized Discount $6,933 6,066 5,199 Carrying Value $103,067 103,934 104,801 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1 (b) The first interest payment on June 30. (c) The second interest payment on December 31. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $110,000 cash January 1. Note: Enter debits before credits. Debit Credit General Journal Date 1 of 1

Answer 1

Journal Entry Answer General Journal Debit Credit Date 1 Jan, 01 Cash $103,067 Discount on Bonds Payable $6,933 $110,000 Bonds Payable (To record the issue bonds at discount) 2 June, 30 Interest Expense $4,167 $867 Discount on Bonds Payable ($6,933 - $6,066) ($110,000 x 6% x 1/2) $3,300 Cash (To record the interest expenses) 3 Dec, 31 Interest Expense $4,167 Discount on Bonds Payable ($6,066 - $5,199) ($110,000 x 6% x 1/2) $867 $3,300 Cash (To record the interest expenses)