Question

On January 1, the first day of the fiscal year, a company issues a $7,500,000, 8%, five-year bond that pays semiannual interest of $300,000 ($7,500,000 x 8% x ½), receiving cash of $7,811,873.

Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles.

TAUL TU ACCOUNTING EQUATION JOURNAL Score: 20/37 POST.REF DEBIT DATE ASSETS LIABILITIES DESCRIPTION CREDIT EQUITY 1 2 3

Answer 1

Date	Description	Post. Ref.	Debit	Credit	Assets	Liabilities	Equity
June 30	Bond interest expense		268813				↓
	Premium on Bonds payable		31187			↓
	Cash			300000	↓
	Workings:
	Premium on Bonds payable	31187	=(7811873-7500000)/10