Question

5 of 5 (0 complete) HW Score: 0%, 0 of 121 pt Score: 0 of 50 pts P12-35A (similar to) Question Help On January 1, 2018, Agricultural Credit Union (ACU) issued 8%, 20-year bonds payable with face value of $600,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 104. Journalize the following bond transactions (Click the icon to view the bond transactions.) (Assume bonds payable are amortized using the straight-line amortization method. Record debits first, then credits. Select explanations on the last line of the joumal entry. Round your answers to the nearest whole dollar.) a. Journalize the issuance of the bonds on Jadi More Info Date Accounts and Ex 2018 Jan. 1 a. Issuance of the bonds on January 1, 2018. b. Payment of interest and amortization on June 30, 2018. c. Payment of interest and amortization on December 31, 2018 d. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded. Choose from any list or enter any number i 2 parts 3 remaining eck Answer Print Done

Answer 1

WORKING NOTES:
	CALCULATION OF INTEREST EXPENSES FOR JUNE 30 AND DEC 31
	Issue Price of Bonds = $ 600,000 X 104% =	$               6,24,000
	Less: Par value	$               6,00,000
	Premium Value	$                  24,000
	Amortization Period (20 years X 2)	40
	Amortization amount per period =	$                        600
	Coupon amount paid in cash ($ 600,000 X 8% X 6/12)	$                  24,000
	Interest Amount per period =
	Coupon amount paid in cash	$                  24,000
	Less: Amortization value	$                        600
	Interest expenses per period	$                  23,400
SOLUTION:
Journal Entries
Date	Account Title and explanation	Debit	Credit
Jan 01, 2018	Cash Account	$               6,24,000
	Premium on issuance of Bonds		$                     24,000
	Bonds Payable		$                 6,00,000
	(Issue the bonds at Premium)
June 30, 2018	Interest Expenses	$                  23,400
	Premium on issuance of Bond	$                        600
	Cash		$                     24,000
Dec 31, 2018	Interest Expenses	$                  23,400
	Premium on issuance of Bond	$                        600
	Cash		$                     24,000
Dec 31, 2037	Bonds Payable	$               6,00,000
	Cash		$                 6,00,000