Homework Answers
Solution
| Account Title and Explanation | Debit | Credit |
| Bond interest expense | $ 63,290 | |
| Premium on bonds payable | $ 23,710 | |
| Cash | $ 87,000 | |
| (Interest on bond paid and Premium amortized) |
.Working
| Bond issue price | $ 3,374,194 |
| Face value | $ 2,900,000 |
| Premium on bonds payable | $ 474,194 |
| Number of Interest payments (10 years x 2) | 20 |
| Discount/ premium to be amortized per Half year | $ 23,710 |
| Cash Interest on bond | $ 87,000 |
| Interest expense to be recorded (87000-23710) | $ 63,290 |
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