Question

Woodwick Company issues 10%, five-year bonds, on December 31, 2016, with a par value of $95,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Premium			Carrying Value
(0)	12/31/2016		$	8,011		$	103,011
(1)	6/30/2017			7,210			102,210
(2)	12/31/2017			6,409			101,409

Use the above straight-line bond amortization table and prepare journal entries for the following.

1. (a) The issuance of bonds on December 31, 2016.
2. (b) The first interest payment on June 30, 2017.
3. (c) The second interest payment on December 31, 2017.

Answer 1

Answer

--Journal entries

Date	Accounts title	Debit	Credit
Dec-16	Cash	$103,011
	Premium on Bonds Payable		$8,011
	Bonds Payable		$95,000
	(to record issuance)
30-Jun-17	Interest Expense	$3,949
	Premium on Bonds Payable ($8011 - 7210)	$801
	Cash ($95000 x 10% x 6/12)		$4,750
	(to record #1 payment)
31-Dec-17	Interest Expense	$3,949
	Premium on Bonds Payable ($7210 - 6409)	$801
	Cash ($95000 x 10% x 6/12)		$4,750
	(to record #2 payment)