Question

Cupola Fan Corporation issued 8%, $410,000, 10-year bonds for $394,000 on June 30, 2021. Debt issue costs were $1,600. Interest is paid semiannually on December 31 and June 30. One year from the issue date (July 1, 2022), the corporation exercised its call privilege and retired the bonds for $405,000. The corporation uses the straight-line method both to determine interest expense and to amortize debt issue costs. Required: 1. to 4. Prepare the journal entry to record the issuance of the bonds, the payment of interest and amortization of debt issue costs on December 31, 2021 & June 30, 2022, and the call of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 3 4 Record the issuance of the bonds. Note: Enter debits before credits. General Journal Debit Credit Date June 30, 2021 Record entry Clear entry View general journal

Answer 1

Journal entries
date	Particulars			debit	credit
30-06-2021	cash			392400
	discount on bonds payable( 410000-394000)			16000
	debt issue cost			1600
	bond payable				410000
31-12-2021	Interest expenses			17280
	discount on bonds payable (16000/20)				800
	debt issue cost (1600/20)				80
	cash (410000*8%*6/12)				16400
30-06-2022	Interest expenses			17280
	discount on bonds payable (16000/20)				800
	debt issue cost (1600/20)				80
	cash (410000*8%*6/12)				16400
01-07-2022	bond payable			410000
	loss on retirement on bond			10840
	discount on bonds payable (16000*18/20)				14400
	debt issue cost (1600*18/20)				1440
	cash				405000