Question

On January 1, 2018, Daryl Unimted ssues 7%, 20-year bonds payable with a lece value of $220,000 The bonds ae ssued at 133 and pay interest on June 30 and December 31 Assume bonds payatle ae anorticed uning the straght ne amortaions method) Read the seurements Requirement 1. Journalze the issuance of the bonds on January 1, 2018 (Record debits first then credes Select explanations on the last ine of the pural entry Credt Date Accounts and Explanation Debit 201 0 Regirements Jan 1 t Jounae the ssance of the bond on January 1,2018 2 Jounae he seanal re payeand anoron of bond pre on June 30 20 pemetnd oton of bond 3 Joun 31,29ns 4Joumalize the retrement of the bond at maturity assuming the last intere payment has aeady been recorded (ve e dae Print Done

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
01-Jan-18	Cash Dr ($220000*103%)	$2,26,600
	To Premium on Bond Payable		$6,600
	To Bond Payable		$2,20,000
	(To record issuance of bond)
30-Jun-18	Interest Expense Dr	$7,535
	Premium on Bond payable Dr ($6600/40)	$165
	To Cash ($220,000*7%*6/12)		$7,700
	(To record Semiannual Interest payment and Amorization of premium on issue)
31-Dec-18	Interest Expense Dr	$7,535
	Premium on Bond payable Dr ($6600/40)	$165
	To Cash ($220,000*7%*6/12)		$7,700
	(To record Semiannual Interest payment and Amorization of premium on issue)
01-Jan-38	Bond Payable Dr	$2,20,000
	To Cash		$2,20,000
	(To record retirement of the bond at maturity)