Question

Crane Company issued $264,000, 8%, 15-year bonds on December 31, 2021, for $253,440. Interest is payable annually on December 31. Crane uses the straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2022. (c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Answer 1

Date Dec 31,2021 Issue Entry 1. Record the Bond Issue General Journal Cash Discount on Bonds Payable Bonds Payable Record the issue of the Bond with Discount Debit Credit 253440 10560 264000 Journal entris for interest Payment Record the interest payment and amotization Date General Journal Debit Credit Dec 31,2022 Interest Expenses 21824 Discount on Bonds Payable 704 Cash 21120 Record the interest Expense and amortization of Discount Cash interest = 264000*85 21120 bond Amortization = 10560/15 704 Retire 1. Record the Bond Issue Date General Journal Debit Credit Dec 31,2036 Bonds Patyable 264000 Cash 264000 Record theREtire the Bond