Question

Exercise 10-6 Straight-Line: Recording bond issuance and discount amortization LO P2 Dobbs Company issues 8%, two-year bonds, on December 31, 2019, with a par value of $97,000 and semiannual interest payments. Seni annual Period-End (0) 12/31/2019 (1) 6/30/2020 (2) 12/31/2020 (3) 6/30/2021 (4) 12/31/2021 Un amortized Discount $5,940 4.455 2,970 1.RS Carrying Value $91,060 92,545 94.030 95.515 97,000 Use the above straight-line bond amortization table and prepare journal entries for the following. Required: (a) The issuance of bonds on December 31, 2019. (b) The first through fourth interest payments on each June 30 and December 31 (c) Record the maturity of the bonds on December 31, 2021 Complete this question by entering your answers in the tabs below. Required A Required B Required The issuance of bonds on December 31, 2019 View transaction list Journal entry worksheet Record the issue of bonds with a par value of $97,000 cash on December 31, < Prev 8 of 14 HII Next >

Answer 1

a)

Journal

Dec. 31, 2019	Cash	91,060
	Discount on bonds payable	5,940
	Bonds payable		97,000

b)

Semi annual interest payment = 97,000 x 8% x 6/12

= $3,880

Journal

June 30, 2020	Interest expense	5,365
	Discount on bonds payable		1,485
	Cash		3,880
Dec. 31, 2020	Interest expense	5,365
	Discount on bonds payable		1,485
	Cash		3,880
June 30, 2021	Interest expense	5,365
	Discount on bonds payable		1,485
	Cash		3,880
Dec. 31, 2021	Interest expense	5,365
	Discount on bonds payable		1,485
	Cash		3,880

c)

Dec. 31, 2021	Bonds payable	97,000
	Cash		97,000

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