Question

Alexander Company issued $160,000, 12%, 10-year bonds payable at 96 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018. 8. Assume the bonds payable was instead issued at 110. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond discount or premium. (Record debits first, then credits. Select explanations on the last line of the journal entry.) Cash 9,600 Paid semiannual interest and amortized discount 8. Assume the bonds payable was instead issued at 110. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond discount or premium. Start by journalizing the issuance of the bonds payable. Date Accounts and Explanation Debit Credit Jan. 1 Cash 110000 Premium on Bonds Payable Bonds Payable 160,000 Issued bonds at a premium.

Answer 1

Requirement 6

Solution

Date	Account Title and Explanation	Debit	Credit
Jan 01	Cash	$ 153,600
	Discount on bonds payable	$ 6,400
	Bonds payable		$ 160,000
	(To record Issuance of bonds )

Requirement 7

Solution

Date	Account Title and Explanation	Debit	Credit
July 1	Bond interest expense	$ 9,920
	Discount on bonds payable		$ 320
	Interest payable		$ 9,600
	(Interest on bond paid and Premium amortized)

Working

Bond issue price (160000/100*96)	$ 153,600
Face value	$ 160,000
Discount on bonds payable	-$ 6,400
Number of Interest payments (10 years x 2)	20
Discount/ premium to be amortized per Half year	$ 320
Cash Interest on bond (160000 x 6%)	$ 9,600

Requirement 8

Solution

Date	Account Title and Explanation	Debit	Credit
Jan 01	Cash	$ 176,000
	Premium on bonds payable		$ 16,000
	Bonds payable		$ 160,000
	(To record Issuance of bonds )
July 1	Bond interest expense	$ 8,800
	Premium on bonds payable	$ 800
	Interest payable		$ 9,600
	(Interest on bond paid and Premium amortized)

.

Bond issue price (160000/100*110)	$ 176,000
Face value	$ 160,000
Premium on bonds payable	$ 16,000
Number of Interest payments (10 years x 2)	20
Discount/ premium to be amortized per Half year	$ 800
Cash Interest on bond (160,000 x 6%)	$ 9,600
Interest expense to be recorded (9600-800)	$ 8,800