Dobbs Company issues 9%, two-year bonds, on December 31, 2017,
with a par value of $91,000 and semiannual interest
payments.
Semiannual Period-End | Unamortized Discount | Carrying Value | ||||||
(0) | 12/31/2017 | $ | 5,820 | $ | 85,180 | |||
(1) | 6/30/2018 | 4,365 | 86,635 | |||||
(2) | 12/31/2018 | 2,910 | 88,090 | |||||
(3) | 6/30/2019 | 1,455 | 89,545 | |||||
(4) | 12/31/2019 | 0 | 91,000 | |||||
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
The issuance of bonds on December 31, 2017.
1
Record the issue of bonds with a par value of $91,000 cash on December 31, 2017.
The first through fourth interest payments on each June 30 and December 31.
1
Record the interest payment and amortization on June 30, 2018.
2
Record the interest payment and amortization on December 31, 2018.
3
Record the interest payment and amortization on June 30, 2019.
4
Record the interest payment and amortization on December 31, 2019.
Record the maturity of the bonds on December 31, 2019.
1
Record the payment on maturity on December 31, 2019.
Date | Account Titles and Explanation | Debit | Credit | ||
(a) | Dec 31, 2017 | Cash | $85,180 | ||
Discount on Bonds Payable | $5,820 | ||||
Bonds Payable | $91,000 | ||||
(b) | June 30, 2018 | Interest Expense | $5,550 | ||
Discount on Bonds Payable | $1,455 | ($5,820/4) | |||
Cash | $4,095 | ($91.000 x 9% x 1/2) | |||
Dec 31, 2018 | Interest Expense | $5,550 | |||
Discount on Bonds Payable | $1,455 | ||||
Cash | $4,095 | ||||
June 30, 2019 | Interest Expense | $5,550 | |||
Discount on Bonds Payable | $1,455 | ||||
Cash | $4,095 | ||||
Dec 31, 2019 | Interest Expense | $5,550 | |||
Discount on Bonds Payable | $1,455 | ||||
Cash | $4,095 | ||||
(c) | Dec 31, 2019 | Bonds Payable | $91,000 | ||
Cash | $91,000 | ||||
Dobbs Company issues 9%, two-year bonds, on December 31, 2017, with a par value of $91,000...
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