Question

Cullumber Company issued $333,000, 8%, 15-year bonds on December 31, 2021, for $319,680. Interest is payable annually on December 31. Cullumber 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	Account Title	Debit ( $)	Credit ($)
Dec. 31, 21	Cash	319680
	Discount on Bonds Payable	13320
	Bonds Payable		333000
Dec. 31, 22	Interest Expense ( 26640 + 888 )	27528
	Discount on Bonds Payable ( 13320 / 15 )		888
	Cash ( 333000 * 8%)		26640
Maturity	Bonds Payable	333000
	Cash		333000