Question

Question 9 View Policies Current Attempt in Progress Blossom Company issued $294.000,7%, 15-year bonds on December 31, 2021, for $282,240. Interest is payable annually on December 31. Blossom 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. le) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. No. Date Account Titles and Explanation Debit Credit (a) Dec 31, 2021 Cash 282240 Discount on Bonds Payable 11760 Bonds Payable 294000 (b) Dec 31, 2022 Interest Expense Discount on Bonds Payable 18660 Cash c) Dec 31, 2036 Bonds Payable 294,000 Cash 294,000

Answer 1

Solution

Date	Account Title and Explanation	Debit	Credit
December 31, 2021	Cash	$ 282,240
	Discount on bonds payable	$ 11,760
	Bonds payable		$ 294,000
	(To record Issuance of bonds )
December 31, 2022	Bond interest expense	$ 21,364
	Discount on bonds payable		$ 784
	Cash		$ 20,580
	(Interest on bond paid and Discount amortized)
December 31, 2036	Bonds payable	$ 294,000
	Cash		$ 294,000
	(To record redemption of bonds)

Working

Bond issue price	$ 282,240
Face value	$ 294,000
Discount on bonds payable	$ 11,760
Number of Interest payments (15 years x 1)	15
Discount/ premium to be amortized per Half year	$ 784
Cash Interest on bond (294000 x 7%)	$ 20,580
Interest expense to be recorded (20580+784)	$ 21,364