Question

Wookie Company issues 6%, five-year bonds, on January 1 of this year, with a par value of $93,000 and semiannual interest payments.

Semiannual Period-End		Unamortized Premium			Carrying Value
(0)	January 1, issuance	$	7,971		$	100,971
(1)	June 30, the first payment		7,174			100,174
(2)	December 31, the second payment		6,377			99,377

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.

Answer 1

Date Issue Entry 1. Record the Bond Issue General Journal Debit Credit Jan-01 Cash 100971 Premium on Bonds Payable 7971 Bonds Payable 93000 Record the issue of the Bond with Premium Date Record the interest Payment Record the interest Paymnet and amotization General Journal Debit Jun-30 Interest Expenses Premium on Bonds Payable Cash (93000*6%*6/12) Record the interest Paymnet and amotization Credit 5049 797 5580 Date Credit Record the interest Expenses Adjustment and amotization General Journal Debit Jun-30 Interest Expenses 3005 Premium on Bonds Payable 797 Cash Record the interest Paymnet and amotization 5580