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Exercise 14.5 Straight-Line: Recording b。nd issuance and discount amortization LO PI, P2 Dobbs Company issues 996, two-year bonds, on December 31, 2015, with a par value of $109,000 and semiannual interest payments miannual Period- Unamortizecd Carrying Value $102,820 104,365 105,910 107,455 109,000 End Discount (0) 12/31/2015 (1) 6/30/2016 (2) 12/31/2016 (3) 6/30/2017 (4) 12/31/2017 $ 6,180 4,635 3,090 1,545 0 Use the above straight-line bond amortization table and prepare journal entries for the following Required (a)The issuance of bonds on December 31, 2015 Answer is complete and correct. 0 Date General Journal Debit Credit Dec. 31, 2015Cash 102,820 count on bonds payable Bonds payable Dis 6,180 109,000(b)The first through fourth interest payments on each June 30 and December 31 Answer is not complete 0 Date General Journal Debit Credit Jun. 30, 2016 Bond interest expense Discount on bonds payable Cash Dec. 31, 2016 Bond interest expense Discount on bonds payable Cash Jun. 30, 2017 Bond interest expense Discount on bonds payable Cash Dec. 31, 2017 Bond interest expense Discount on bonds payable Cash (C)Record the payment to retire the bonds on December 31, 2017 Answer is complete and correct. 0 Date General Journal Debit Credit Dec. 31, 2017 Bonds payable 109,000 Cash 109,000

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0 Date General Journal Debit Credit 1June 30, 2016 Bond Interest Expense [$4,905 +$1,545] $6,450 Discount on bonds Payable [Please refer working Note 1 below] $1,545 Cash [Please refer working Note 2 below] $4,905 2Dec 31,2016 |Bond Interest Expense [$4,905 $1,545] $6,450 Discount on bonds Payable [Please refer working Note 1 below] $1,545 Cash [Please refer working Note 2 below] $4,905 3June 30, 2017Bond Interest Expense [$4,905+$1,545] $6,450 Discount on bonds Payable [Please refer working Note 1 below] $1,545 Cash Please refer working Note 2 below] $4,905 4Dec 31,2017Bond Interest Expense [$4,905+$1,545] $6,450 Discount on bonds Payable[Please refer working Note 1 below] $1,545 Cash Please refer working Note 2 below] $4,905Working Note 1- Amortization of discount under straight-line method Total Discount$6,180 Life of the bond 2 years Yearly amortization amount $3,090 per year Yearly amortization amount $3,090_ Amortization amount for 6 months- %. 1,545 per 6 months 2 Working Note 2- Computation of interest paid in cash to bond holders for every 6 months Bond par value Rate of interest Interest payable on bonds payable $ 109,000 x 9% $109,000 -9% per year $9,810 >Represents interests for 12 months 126 months s4905>paid in cash to bond holders $9,810 mont hs7 Interest for the 6 months

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