Question

Required information [The following information applies to the questions displayed below.] Part 1 of 2 On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $180,000, 8 percent bond issue for $168,447. The bonds pay interest each December 31 and mature in 10 years. Seton amortizes the bond discount using the straight-line method. 2.08/2.5 points awarded Required: Scored 1. & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field. Round your answers to the nearest whole dollar.) Credit No 1 Date January 01 General Journal Cash Discount on Bonds Payable Bonds Payable Debit 168,447 11,553 180,000 December 31 15,160 X Interest Expense Discount on Bonds Payable Cash - 760 % 14,400

Answer 1

Issue Entry 1. Record the Bond Issue General Journal Debit Credit Date January 1st Cash 168447 Discount on Bonds Payable Bonds Payable 11553 180000 Record the Issue of the Bond with Discount Journal entris for interest Payment General Journal Debit Credit Date Decemebr 31 Interest Expenses 15555 Discount on Bonds Payable 1155 Cash 14400

Cash Paid (180000*8% Discount Amortised (11553/10) 14400 1155 Interest Expense 15555 Changes During the Period Ending Bond liability Balances Bonds Discount Discount on Cash Paid Carrying Value Period Ended Interest Expense Bonds Payable Amortised Payable Start 180000 0 11553 168447 Year 1 end Year 2 end Year 3 end Year 4 end Year 5 end Year 6 end Year 7 end Year 8 end Year 9 end Year 10 end 1155 15555 169602 14400 180000 10398 1155 15555 9242 170758 14400 180000 14400 1155 15555 180000 8087 171913 1155 15555 173068 14400 180000 6932 180000 5777 174224 14400 1155 15555 15555 175379 14400 1155 180000 4621 1155 15555 3466 176534 14400 180000 15555 14400 1155 180000 2311 177689 1155 15555 1155 178845 14400 180000 15555 14400 1155 180000 0 180000