On January 1, 2016, Hackman Corporation issued $1,150,000 face value 7% bonds dated January 1, 2016, for $1,168,550. The bonds pay interest semiannually on June 30 and December 31 and are due December 31, 2020. Hackman uses the straight-line amortization method.
Required:
| Record the issuance of the bonds and the first two interest payments. |
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Record the issuance of the bonds on January 1 and the first two interest payments on June 30 and December 31.
GENERAL JOURNAL
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Journal Entries
| Date | Particulars | Debit | Credit |
| Jan 1 | Cash | 1168550 | |
| Bonds Payable | 1150000 | ||
| Premium on bonds Payable | 18550 | ||
| June 30 | Interest Expense | 42105 | |
| Premium on Bonds Payable(18550/60 months)*6 months | 1855 | ||
| Cash(1150000*0.07*6/12) | 40250 | ||
| Dec 31 | Interest Expense | 42105 | |
| Premium on Bonds Payable(18550/60 months)*6 months | 1855 | ||
| Cash(1150000*0.07*6/12) | 40250 | ||
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