Question

Alpine Company issues $2.0 million, 10-year, 7% bonds at 99, with interest payable on December 31. The straight-line method is used to amortize bond discount. Your answer is correct. Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Cash 1980000 Discount on Bonds Payable 20000 Bonds Payable 2000000 e Textbook and Media List of Accounts X Your answer is incorrect. Prepare the journal entry to record interest expense and bond discount amortization on December 31, 2022, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31

Answer 1

Credit | Date Account Titles and Explanation Jan. 1 Cash Discount on Bonds payable Bonds payable Debit $ 1,980,000 $ 20,000 $ 2,000,000 $ 142.000 Dec. 31 Interest expense Discount on Bonds payable Cash S $ 2.000 140,000 Working Notes: Cash = $2,000,000*7% = $140,000 Discount on bonds payable = $20,000/10 = $2.000 Interest expense = $140,000+$2,000 = $142.000