Question

The Monty Company issued $240,000 of 13% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 96.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Monty Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	January 1, 2017
(b)	Jan. 1, 2017July 1, 2017Dec. 31, 2017
(c)	Jan. 1, 2017July 1, 2017Dec. 31, 2017

Answer 1

		Account Titles and Explanation	Debit	Credit
a	January 1, 2017	Cash	230400		=240000*0.96
		Discount on Bonds payable	9600
		Bonds payable		240000
b	July 1, 2017	Interest expense	16560
		Discount on Bonds payable		960	=9600/10
		Cash		15600	=240000*13%*6/12
c	Dec. 31, 2017	Interest expense	16560
		Discount on Bonds payable		960
		Interest payable		15600