Question

Your answer is partially correct. Try again. Stephanie Ram Corporation have a $760,000 "bond issue" dated February 1, 2016 due in 10 years with an annual interest rate of 9%. Interest is payable February 1 and August 1. On April 1, 2016, the bond was sold for $677,400 plus accrued interest. Using the straight-line method, prepare the general journal entries for each of the following: a) The issuance of the bond on April 1, 2016. b) Payment of the semi-annual interest and the amortization of the discount on August 1, 2016. c) Accrual of the interest and the amortization of the discount on December 31, 2016 d) Payment of the semi-annual interest and the amortization of the discount on February 1, 2017 (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Do not use dollar signs ($) when entering amounts. formatted numbers reflected in your final answers, you must enter your answers with commas. Round answers to 2 decimal places, e.g. 5,275.25.) Debit Credit Date Account Titles and Explanation 2016 Apr 11 Cash 1 688800 Discount on Bonds Payable 1 Bonds Payable Bond Interest Payable Bond Interest Expense Bond Interest Payable Aug. e D 11400

Answer 1

Date	Particulars	Debit ($)	Credit ($)
b	Bond Interest expenses	26242
	Bond interest payable	11400
	Cash		34200
	Discount on bonds payable		3442
c	Bond interest expense	38000
	Discount on bonds payable		9500
	Bond interest payable		28500
d	Bond interest expense	7600
	Bond interest payable	28500
	Discounts on bonds payable		1900
	Cash		34200

Notes :

Bond discount amortization = 82600/10years

= 8260

Discount for 5months = 8260*5/12 = 3441.66

Interest on bond = 760000*12% = 91200

= 91200*5/12 = 38000

Interest on bond = 760000*12% =91200

= 91200 *1/12 = 7600