Question

Crane Company issues $2.2 million, 20-year, 9% bonds at 99, with interest payable on December 31. The straight-line method is used to amortize bond discount. Prepare the journal entry to record interest expense and bond discount amortization on December 31, 2022, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount Click if you would like to Show Work for this question: Open Show Work

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Interest expense	199100
	Discount on bonds payable		1100
	Cash ($2200000 x 9%)		198000
	(To record interest expense and bond discount amortization)

Discount on bonds payable = $2200000 - ($2200000 x 99/100) = $2200000 - $2178000 = $22000

Amortization of discount = $22000/20 = $1100