Question

On January​ 31, 018​, Driftwood ​Logistics, Inc., issued five​-year, 2​% bonds payable with a face value of $11,000,000. The bonds were issued at 94 and pay interest on January 31 and July 31. Driftwood Logistics amortizes bond discounts using the​ straight-line method.Read the requirement

a. Record the issuance of the bond payable on January​ 31, 2018.

​ (Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

Journal Entry
Date		Accounts	Debit	Credit
Jan	31	Cash
		Discount on Bonds Payable
		Bonds Payable

b. Record the payment of semiannual interest and amortization of bond discount on July​ 31,

20182018.

Journal Entry
Date		Accounts	Debit	Credit
July	31	Interest Expense
		Discount on Bonds Payable
		Cash

c. Record the interest accrual and discount amortization on December​ 31, 2018. ​(Do not round intermediary calculations. Only round the amount you input in the cell to the nearest whole​ dollar.)

Journal Entry
Date		Accounts	Debit	Credit
Dec	31	Interest Expense
		Discount on Bonds Payable
		Interest Payable

Answer 1

Date	General Journal	Debit	Credit
Jan-31	Cash ($1,10,00,000 X 94%)	$ 1,03,40,000
	Discount on bonds payable ($1,10,00,000 X 6%)	$       6,60,000
	Bonds payable		$ 1,10,00,000
	(Being issue of bonds recorded)
Jul-31	Interest expense	$       1,76,000
	Discount on bonds payable [$6,60,000 / (5 years X 2)]		$           66,000
	Cash ($1,10,00,000 X 2% X 6/12)		$       1,10,000
	(Being interest recorded)
Dec-31	Interest expense	$       1,46,667
	Discount on bonds payable [($6,60,000 /60 months) X 5months]		$           55,000
	Interest payable ($1,10,00,000 X 2% X 5/12)		$           91,667
	(Being interest payable recorded)