Question

Alexander Company issued $260,000, 4%, 10-year bonds payable at 94 on January 1, 2018. 6. Journalize the issuance of the bonds payable on January 1, 2018. 7. Jounalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018 8. Assume the bonds payable was instead issued at 108. Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond discount or premium. (Record debits first, then credits. Select explanations on the last line of the journal entry.) 6. Journalize the issuance of the bonds payable on January 1, 2018. Date Accounts and Explanation Debit Credit Jan. 1 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2018. Date Accounts and Explanation Debit Credit Jul. 1

Answer 1

Solution:

Journal Entries - Alexander Company
Event	Date	Particulars	Debit	Credit
6	1-Jan-18	Cash Dr	$244,400.00
		Discount on bond payable Dr	$15,600.00
		To Bond Payable		$260,000.00
		(To record issue of bond at discount)
7	1-Jul-18	Interest expense Dr	$5,980.00
		To Cash ($260,000*4%*6/12)		$5,200.00
		To Discount on bond payable ($15,600/20)		$780.00
		(To record semi annual interest payment and discount amortization)
8a	1-Jan-18	Cash Dr	$280,800.00
		To Bond Payable		$260,000.00
		To Premium on Bond Payable		$20,800.00
		(To record issue of bond at premium)
8b	1-Jul-18	Interest expense Dr	$4,160.00
		Premium on bond payable Dr ($20,800/20)	$1,040.00
		To Cash ($260,000*4%*6/12)		$5,200.00
		(To record semi annual interest payment and premium amortization)