Question

Your answer is partially correct. Try again. The Blue Company issued $250,000 of 11% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 96. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Blue Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan 1, 2020 Cash 240000 No (a) 10000 Discount on Bonds Payu 250000 Bonds Payable 13500 12020 Interest Expense 250 Discount on Bonds Pavable 13750 Cash 13500 (c) Interest Expense 250 SPM Discount on Bords Payable

Answer 1

Journal Entries
No	Date	Accounts Title & Explanation	Debit	Credit
a	Jan 01 2020	Cash	$        240,000
		Discount on Bonds Payable	$          10,000
		Bonds Payable		$                    250,000
		(being Issuance of bond recorded)
b	July 01 2020	Interest Expense	$          14,750
		Discount on Bonds Payable		$                         1,000
		Cash		$                       13,750
		(being payment of Interest recorded)
c	Dec 31 2020	Interest Expense	$          14,750
		Discount on Bonds Payable		$                         1,000
		Interest Payable		$                       13,750
		(being accrual of Interest recorded)

Summary Particulars Amount Formula Face Value of Bonds $ 250,000 Issued Value of Bonds $ $ 240,000 Discount on Bonds $ 10,000 Period of Bond in years 5 Discount per 6 months in SLM method $ 1,000 =($10,000*1/5*1/2) Cash payment per 6 months $ 13,750 =($250,000*11%)/2 Interest Expense per 6 months $ 14,750 =($1000 + $ 13,750)