Question

Dobbs Company issues 5%, two-year bonds, on December 31, 2017, with a par value of $95,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2017		$	5,900		$	89,100
(1)	6/30/2018			4,425			90,575
(2)	12/31/2018			2,950			92,050
(3)	6/30/2019			1,475			93,525
(4)	12/31/2019			0			95,000

Use the above straight-line bond amortization table and prepare journal entries for the following.

Required:
(a) The issuance of bonds on December 31, 2017.
(b) The first through fourth interest payments on each June 30 and December 31.
(c) Record the maturity of the bonds on December 31, 2019.
  

Answer 1

Journal entries

Date	account and explanation	debit	credit
12/31/17	cash	89100
	Discount on bond payable	5900
	Bond payable		90000
June 30	interest expenses	3850
	Discount on bond payable		1475
	Cash		2375
	(to record interest)
Dec 31	interest expenses	3850
	Discount on bonds payable		1475
	Cash		2375
	(to record interest)
June 30	interest expense	3850
	Discount on bonds payable		1475
	Cash		2375
	(to record interst)
Dec 31	interest expense	3850
	Discount on bonds payable		1475
	Cash		2375
	(to record interest)
Dec 31	bonds payable	95000
	Cash		95000
	(to record maturity)