The Splish Company issued $210,000 of 9% bonds on January 1, 2017. The bonds are

Question

The Splish Company issued $210,000 of 9% bonds on January 1, 2017. The bonds are due January 1, 2022, 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 Splish Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Explanation / Answer

Journal entries (2017) Journal entries (2018) Date Account Titles Debit Credit Date Account Titles Debit Credit Jan.1,2017 Cash $201,600.00 Jan.1,2018 Interest Payable $9,450.00 Discount on Bonds Payable $8,400.00 Cash $9,450.00 Bonds Payable $210,000.00 July.1,2017 Interest Expense $10,290.00 July.1,2018 Interest Expense $10,290.00 Discount on Bonds Payable $840.00 Discount on Bonds Payable $840.00 Cash $9,450.00 Cash $9,450.00 Dec.31,2017 Interest Expense $10,290.00 Dec.31,2018 Interest Expense $10,290.00 Discount on Bonds Payable $840.00 Discount on Bonds Payable $840.00 Interest Payable $9,450.00 Interest Payable $9,450.00 Journal entries (2019) Journal entries (2020) Date Account Titles Debit Credit Date Account Titles Debit Credit Jan.1,2019 Interest Payable $9,450.00 Jan.1,2020 Interest Payable $9,450.00 Cash $9,450.00 Cash $9,450.00 July.1,2019 Interest Expense $10,290.00 July.1,2020 Interest Expense $10,290.00 Discount on Bonds Payable $840.00 Discount on Bonds Payable $840.00 Cash $9,450.00 Cash $9,450.00 Dec.31,2019 Interest Expense $10,290.00 Dec.31,2020 Interest Expense $10,290.00 Discount on Bonds Payable $840.00 Discount on Bonds Payable $840.00 Interest Payable $9,450.00 Interest Payable $9,450.00 Journal entries (2021) Journal entries (2022) Date Account Titles Debit Credit Date Account Titles Debit Credit Jan.1,2021 Interest Payable $9,450.00 Jan.1,2022 Interest Payable $9,450.00 Cash $9,450.00 Cash $9,450.00 July.1,2021 Interest Expense $10,290.00 Jan.1,2022 Bond Payable $210,000.00 Discount on Bonds Payable $840.00 Cash $210,000.00 Cash $9,450.00 Dec.31,2021 Interest Expense $10,290.00 Discount on Bonds Payable $840.00 Interest Payable $9,450.00 Straight line amortization of discount on bonds payable = Discount on bonds Payable / No.of semi annual periods Straight line amortization of discount on bonds payable = $8400 / 10 periods = $840

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.