Question

Kingbird, Inc. issued $480,000, 596, 20-year bonds on January 1, 2019, at 101. Interest is payable annually on January 1. Kingbird uses straight-line amortization for bond premium or discount. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Prepare the journal entry to record the accrual of interest and the premium amortization on December 31,2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Date Account Titles and Explanation Credit Dec. 31 Prepare the journal entry to record the payment of interest on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 1 Debit Credit Prepare the journal entry to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Jan. 1, 2039 Attempts: 0 of 1 used Save for Later Check Answer

Answer 1

1) Journal entry

Date	account and explanation	Debit	credit
jan 1	Cash (480000*1.01)	484800
	Bonds payable		480000
	Premium on bonds payable		4800
	(To record bond issue)
Dec 31	Interest expense	23760
	Premium on bonds payable (4800/20)	240
	Interest payable (480000*5%)		24000
	(To record interest)
Jan 1	Interest payable	24000
	Cash		24000
	(To record interest paid)
Jan 1,2039	Bonds payable	480000
	cash		480000
	(To record redemption)