Question

Headland Company issued $636,000 of 10% 20-year bonds on January 1, 2017 at 10. Interestisible se u l and January 1 Headland Company uses the state method of motion for bond premium or discount Prepare the journ es to record the following onts delect "No Entry for the accounts and enter for the amounts Credit Accountiese indented when amont d. Den indentmonly (a) The issuance of the bonds The payment of interest and the related o n 1 2017 The soul of interest and the teamortization on December 31, 2017 Account Tities and Explanation Date 1/1/17

Answer 1

Solution:

Date	Particulars	Debit	Credit
01-Jan-17	Cash A/c Dr	$6,55,080
	To premium on bond payable		$19,080
	To bonds payable		$6,36,000
	(Being bond issued at premium)

Date	Particulars	Debit	Credit
01-Jul-17	Interest Expense Dr	$31,323
	Premium on bond payable ($19080/40)	$477
	To Cash ($636000*10%*6/12)		$31,800
	(To record first payment of Interest and Amortization of premium on issue)

Date	Particulars	Debit	Credit
31-Dec-17	Interest Expense Dr	$31,323
	Premium on bond payable ($19080/40)	$477
	To Interest payable ($636000*10%*6/12)		$31,800
	(To record second accrual of Interest and Amortization of premium on issue)