Question

ULLULATUR PRINTER VERSION BACK Exercise 10-21 Blossom Company issued $450,000, 7%, 15-year bonds on December 31, 2016, for $432,000. Interest is payable annually on December 31, Blossom uses straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) (b) (c) The issuance of the bonds. The payment of interest and the discount amortization on December 31, 2017 The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded No. Debit Credit Date Account Titles and Explanation (a) Dec. 31, 2016 (b) Dec 31, 2017 (c) Dec 31, 2031

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Dec. 31, 2016	Cash	$432,000
		Discount on Bonds Payable	$18,000
		Bonds Payable		$450,000
(b)	Dec. 31, 2017	Interest expense	32700
		Discount on Bonds Payable (18000/15)		1200
		Cash (450000*7%)		31500
(c)	Dec. 31, 2031	Bonds Payable	450000
		Cash		450000