Question

Dobbs Company issues 8%, two-year bonds, on December 31, 2019, with a par value of $92,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2019		$	5,840		$	86,160
(1)	6/30/2020			4,380			87,620
(2)	12/31/2020			2,920			89,080
(3)	6/30/2021			1,460			90,540
(4)	12/31/2021			0			92,000

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.

Answer 1

Issue Entry 1. Record the Bond Issue Date General Journal Debit Credit December 31,2019 Cash 86160 Discount on Bonds Payable 5840 Bonds Payable 92000 Record the issue of the Bond with Discount Journal entris for interest Payment Record the interest payment and amotization General Journal Debit Credit June 30 2020 Interest Expenses 5140 Discount on Bonds Payable 1460 Cash 3680 Record the interest Expense and amortization of Discount Cash interest =92000*85*6/12 3680! bond Amortization =4380-5840 1460 Date

Date General Journal Debit Credit Dec 31,2020 Interest Expenses 5140 Discount on Bonds Payable 1460 Cash 3680 Record the interest Expense and amortization of Discount Date General Journal Debit Credit June 30 2021 Interest Expenses 5140 Discount on Bonds Payable 1460 Cash 3680 Record the interest Expense and amortization of Discount General Journal Debit Credit Dec 31,2021 Interest Expenses 5140 Discount on Bonds Payable 1460 Cash 3680 Record the interest Expense and amortization of Discount Retire 1. Record the Retire the Bond Date General Journal Debit Credit Dec 31 2021 Bonds Patyable 92000 Cash 92000 Record theREtire the Bond Date