Question

The Concord Company issued $300,000 of 10% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 104.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Concord Company records straight-line amortization semiannually.

Answer 1

Date	Accounts Title and Explanation	Debit	Credit
Jan-01	Cash	312,000		(300000*104%)
	Bonds Payable		300,000
	Premium on Bonds payable		12,000
	(To record issuance of bond)
Jul-01	Interest Expense	13,800
	Premium on bond payable	1,200		12000/10 semiannual)
	Cash		15,000	(300000*10%/2)
	(To accrue interest exp)
Dec-31	Interest Expense	13,800
	Premium on bond payable	1,200
	Interest Payable		15,000
	(To accrue interest exp)