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Alpha Company purchased a Si ,000, 5 years, 5% bond on July 1, 2015 for S950. Interest is paid annually on June 30. The straight line method of amortization is used for both premiums & discounts. Use this information to prepare the adjusting General Journal entry (without explanation) for the December 31, 2017. If no entry is required then write No Entry Required. D of I U Format General Journal: Debit Date Accounts 民月 Ea
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Answer #1

Answer

Journal entry at December 31 will be

Date

General Journal;

Debit

Credit

31 Dec 2015

Interest Receivable

$ 25.00

Investment in bond

$    5.00

              Interest revenue

$          30.00

.

Par value of Bond

$      1,000.00

Cash paid

$         950.00

Discount on bond allowed (1000-950)

$            50.00

Amortization per Year ($50/5)

$            10.00

Amortization till December 31

$              5.00

Interest for year

$            50.00

Interest for 6 months

$            25.00
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