Question

On January 1, Renewable Energy issues bonds that have a $20,000 par value, mature in eight years, and pay 12% interest semiannually on June 30 and December 31. 1. Prepare the journal entry for issuance assuming the bonds are issued at a 99 and (6) 10312 2. How much interest does the company pay (in cash) to its bondholders every six months of the bonds are sold at par? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 103%. View transaction ist Journal entry worksheet Record the issuance for bond at 99. Note: Enter debits before credits General Journal Debit Credit wan01 < Prev 2 of 17 Next >

Answer 1

1. Renewable Energy- Issue of Bond ( Premium & Discount)
Journal entries
Date	General Journal	Debit	Credit
1-Jan	Cash (20000*99%)	$19,800.00
	Discount on Bonds Payable	$200.00
	Bonds Payable		$20,000.00
1-Jan	Cash (20000*103.50%)	$20,700.00
	Premium on Bonds Payable		$700.00
	Bonds Payable		$20,000.00

2. Computation of Interest

Semiannual Cash Interest payment (20000*12%*6/12)=$1200