Question

On January 31, 2018 Durkin Logisíc, inc Raad the raquircmant issued fiv: year 14% bonds payable with a ce value of S 14 000 000. The bonds ere ssued at 95 and pay meresi on January 3 and Ju 31 Du n Lo stics amortizes bond dac u s using the straight line m od rd tha ssuan a tha hnd payahla on Janusary 31, 2018 Raord dablts Hrst, then cradts Ecluda xplanations from any joumal antriss Journul late Account Debit Credit Jan 3 b. Racord tha paymant of samlannual Interast and amartzatan of bend discount on y 1,20 Journol Entry Date Accounts Debit Credit July 31 c. Recordth i terast accrual and clocount a mo tizadan on December 31, 2010 Da nct round im mediary calculations. Only round the amount you input in ta ce l to the nearest whole dollar. ou input ih Joumel Entry Date Debit Credit Dec 31

Answer 1

Journal Entries Date Account Title and Explaination Debit Post Ref. Credit 2018 Jan.31 Working Note Discount Face Value Issue Price $700,000 Amortization based on Straight Line Method Duration = 5 years Annual Amortization S700.000/5 For Scmi Annual Pcriod $140,000/2 Cash $13,300,000.00 S700,000.00 iscount on Bonds Payable Bonds Payable S14.000,000.00 To record Issue of Bonds at 95) $140,000 $70,000 July.31 erest Expense 1,050,000.00 Cash Discount on Bonds Payable $980,000.00 S70,000.00 To record Semi Aal Interest) Dec.31 terest Expense S875,000.00 Interest Payable Discount on Bonds Payable $816,666.67 S58,333.33 To γecord Accrued Semi Annual Interest for 5 Months)