Question

Problem 1 Part A: On January 1, Altman Company issued bonds that had a par value of $77 509 ith a stated interest rate of 4% and a 5 year maturity date. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued at 103 1/2. a) Prepare the journal entries Altman Company must record in its books at bond issuance and the first interest payment date. Altman Company uses the straight line method to amortize any discount or premium. Date Description Debit Credit 01/01 to record the sale of bonds at a premium (103 1/2 of par value 06/30 to record the semi-annual interest payment & amortization of discount or premium on bonds

Answer 1

PartA
Date	Account Description	Debit	Credit
1-Jan	Cash	80,212.50
	4 % Bond payable		77,500.00
	Premium on issue of Bonds		2,712.50
	(Bond Issued at a premium of 103.5%)
30-Jun	Interest on Bond	1,278.75
	Premium on issue of Bonds	271.25
	To Cash		1,550.00

PartB
Date	Account Description	Debit	Credit
	Wages	1,520.00
	FIT		227.00
	FICA-Social security Tax		49.60
	FICA-Medicare Tax		22.04
	Cash		1,221.36
	(Being payroll Expenses Recorded)

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