On January 1,2016 , Unlimited issues 15%, 15year bonds payable with a face value of $230,000....
On January 1,2016 , Unlimited issues 15%, 15year bonds payable with a face value of $230,000. The bonds are issued at 106 and pay interest on June 30 and December 31.
Requirements
1.Journalize the issuance of the bonds on january 1, 2016.
2. journalize the semiannual interest payment and amortization of bond premium on june 30, 2016
3. Journalize the semi annual interest payment and amortization of bond premium on deember 31 ,2016
4.Journalize the retirment of the bond at maturity (give the date)
Homework Answers
Answer -
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Requirement 1
Date Account Title and Explanation Debit Credit January 1, 2016 Cash $ 2,43,800 Premium on bonds payable $ 13,800 Bonds payable $ 2,30,000 (To record Issuance of bonds ) Requirement 2
Date Account Title and Explanation Debit Credit June 30 2016 Bond interest expense $ 13,340 Premium on bonds payable $ 460 Cash $ 13,800 (Interest on bond paid and Premium amortized) Requirement 3
Date Account Title and Explanation Debit Credit Dec 31 2016 Bond interest expense $ 13,340 Premium on bonds payable $ 460 Cash $ 13,800 (Interest on bond paid and Premium amortized) Requirement 4
Dec 31 2030 Bonds payable $ 2,30,000 Cash $ 2,30,000 (Bond redeemed) Working
Bond issue price (230000/100*106) $ 243,800 Face value( $ 230,000 Premium on bonds payable $ 13,800 Number of Interest payments (15 years x 2) $ 30 Discount/ premium to be amortized per Half year $ 460.00 Interest on bond $ 13,800.00 Interest expense to be recorded (15000-500) $ 13,340
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