Question

Wookie Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $105,000 and semiannual interest payments. (0) (1) Semiannual Period-End January 1, issuance June 30, first payment December 31, second payment Un amortized Premium $8,211 7,390 6,569 Carrying Value $113,211 112,390 111,569 (2) Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1. (b) The first interest payment on June 30. (c) The second interest payment on December 31.

Answer 1

Date	General Journal	Debit	Credit
January 01	Cash	$113,211
	Premium on bonds payable		$8,211
	Bond Payable		$105,000

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Date	General Journal	Debit	Credit
June 30	Bond Interest expense             [Interest paid - Amortized premium = $5,250 - $821]	$4,429
	Premium on bonds payable     [$8,211 - $7,390]	$821
	Cash                                 [Par value x Interest rate = ($105,000 x 10%) x (6 months / 12 months)]		$5,250

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Date	General Journal	Debit	Credit
December 31	Bond Interest expense             [Interest paid - Amortized premium = $5,250 - $821]	$4,429
	Premium on bonds payable     [$6,569 - $7,390]	$821
	Cash                                 [Par value x Interest rate = ($105,000 x 10%) x (6 months / 12 months)]		$5,250