Question

Woodwick Company issues 8%, five-year bonds, on December 31, 2016, with a par value of $108,000 and semiannual interest payments. Semiannual Period-End (0) 12/31/2016 (1) 6/30/2017 (2) 12/31/2017 Unamortized Premium $8,271 7,444 6,617 Carrying Value $116, 271 115,444 114,617 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on December 31, 2016. (b) The first interest payment on June 30, 2017 (c) The second interest payment on December 31, 2017 View transaction list Journal entry worksheet 2 3 Record the issue of bonds with a par value of $108,000 cash on December 31, 2016. Note: Enter debits before credits. General Journal Debit Credit Date Dec. 31, 2016

Answer 1

Solution

Date	Account Title and Explanation	Debit	Credit
December 31 , 2016	Cash	$ 116,271
	Premium on bonds payable		$ 8,271
	Bonds payable		$ 108,000
	(To record Issuance of bonds )
June 30 2017	Bond interest expense	$ 3,493
	Premium on bonds payable	$ 827
	Cash		$ 4,320
	(Interest on bond paid and Discount amortized)
December 31, 2017	Bond interest expense	$ 3,493
	Premium on bonds payable	$ 827
	Cash		$ 4,320
	(Interest on bond paid and Discount amortized)

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The premium amortized in each period is $827 calculated as the difference between unamortized premium between interest payment dates. (7444-6617).