Question

On January 1, 2018, Teachers Credit Union (TCU) issued 5%, 20 year bonds payable with face value of $600,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 108. Joumalize the following bond transactions (Click the icon to view the bond transactions.) (Assume bonds payable are amortured using the straight-line amortization method. Record debits first, the credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar) a. Journalize the issuance of the bonds on January 1, 2018 Date Accounts and Explanation Debit Credit 2018 Jan. 1 540.000 Cash Bonds Payable Premium on Bonds Payable 500,000 40,000 issued bonds at a premium Choose from any list or enter any number in the input fields and then click Check Answer

Answer 1

Answer -

	Date	Accounts and Explanation	Debit ($)	Credit ($)
a.	January 1, 2018	Cash [$500000 * 108%] Bonds Payable [Given in question] Premium on Bonds Payable [Difference] (Issued bonds at premium)	540000 - -	- 500000 40000
b.	June 30, 2018	Interest Expense [Difference] Premium on Bonds Payable [($40000 / 20 years) * 6/12] Cash [($500000 * 5%) * 6/12] (Paid semi-annual interest payment and amortized premium)	11500 1000 -	- - 12500
c.	December 31, 2018	Interest Expense [Difference] Premium on Bonds Payable [($40000 / 20 years) * 6/12] Cash [($500000 * 5%) * 6/12] (Paid semi-annual interest payment and amortized premium)	11500 1000 -	- - 12500
d.	December 31, 2037	Bonds Payable Cash (Retired bonds)	500000 -	- 500000