Question

Brief Exercise 14-03 The Wildhorse Company issued $240,000 of 13% bonds on January 1, 2020. The bonds are due January 1, 2025, 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 Wildhorse 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.) No. Date Account Titles and Explanation Debit Credit (b)

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Answer 1

No (a) Date January 1,2020 Account Titles and Explanation | Debit | Credit Cash $230,400 Discount on bonds Payable $ 9,600 Bonds Payable $240,000 (b) July 1.2020 $ 16,560 Interest Expenses Discount on Bonds Payable Cash $ 960 $ 15,600 $ 16,560 | (c) December 31,2020 Interest Expenses Discount on Bonds Payable Interest Payable $ 960 $ 15,600 Working Notes: January 1, 2020. Discount on Bonds Payable = $240.000*4/100 = $9.600 Cash = $240.000*96/100 = $230,400 July 1.2020. Cash =$240,000*13%*6/12 = $15,600 Discount on Bonds Payable = $9,600/10 =5960 Dec. 31.2020. Cash =$240,000*13%*6/12 = $15,600 Discount on Bonds Payable = $9,600/10 =$960