Question

E10-11 (Supplement 10A) Recording the Effects of a Premium Bond Issue and First Interest Period (Straight-Line Amortization) [LO 10-S1] Grocery Corporation received $300,328 for 11 percent bonds issued on January 1, 2018, at a market interest rate of 8 percent. The bonds had a total face value of $250,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the straight-line method to amortize the bond premium Required 1.& 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.) View transaction list Journal entry worksheet 2 Record the issuance of bonds for $300,328 with a face value of $250,000 Note: Enter debits before credits. Date General Journal Debit Credit January 01 Record entry Clear entry View general journal

Answer 1

Answer

--Journal entries

Date	Accounts title	Debit	Credit
01-Jan	Cash	$300,328
	Premium on Bonds Payable		$50,328
	Bonds Payable		$250,000
	(to record issuance)
31-Dec	Interest Expense	$22,467
	Premium on Bonds Payable ($50328 / 10 years)	$5,033
	Cash ($250000 x 11%)		$27,500
	(to record interest payment)