Dobbs Company issues 7%, two-year bonds, on December 31, 2017, with a par value

Question

Dobbs Company issues 7%, two-year bonds, on December 31, 2017, with a par value of $107,000 and semiannual interest payments Semiannual Period-End (0) 12/31/2017 (1) 6/30/2018 (2) 12/31/2018 Unamortized Discount $6,140 4,605 3,070 1,535 Carrying Value $100,860 102,395 103,930 105, 465 107,000 6/30/2019 (4) 12/31/2019 Use the above straight-line bond amortization table and prepare journal entries for the following Required: (a) The issuance of bonds on December 31, 2017 (b) The first through fourth interest payments on each June 30 and December 31 (c) Record the maturity of the bonds on December 31, 2019 Complete this question by entering your answers in the tabs below. Required A Required B Required C Record the maturity of the bonds on December 31, 2019 View transaction list Journal entry worksheet Record the payment on maturity on December 31, 2019 Note: Enter debits before credits Date General Journal Debit Credit Dec 31, 2019

Explanation / Answer

Answers

Date

General Journal

Debit

Credit

Dec 31, 2017

Cash

$                                100,860.00

Discount on Bonds Payable

$                                     6,140.00

   Bonds Payable

$                107,000.00

(Bonds payable issued at discount)

Discount = $ 6140 to be amortised in 4 interest payment = 6140 / 4 = $ 1,535

Interest paid in cash = 107000 x 7% x 6month/12month =$ 3,745

Date

General Journal

Debit

Credit

30-Jun-18

Interest Expense

$                                     2,210.00

   Discount on Bonds Payable

$                                     1,535.00

   Cash

$                     3,745.00

( Interest Payment)

31-Dec-18

Interest Expense

$                                     2,210.00

   Discount on Bonds Payable

$                                     1,535.00

   Cash

$                    3,745.00

( Interest Payment)

30-Jun-19

Interest Expense

$                                     2,210.00

   Discount on Bonds Payable

$                                     1,535.00

   Cash

$                     3,745.00

( Interest Payment)

31-Dec-19

Interest Expense

$                                     2,210.00

   Discount on Bonds Payable

$                                     1,535.00

   Cash

$                     3,745.00

( Interest Payment)

Date

General Journal

Debit

Credit

31-Dec-19

Bond Payable

$                                 107,000.00

   Cash

$               107,000.00

(Bonds matured)

Date

General Journal

Debit

Credit

Dec 31, 2017

Cash

$                                100,860.00

Discount on Bonds Payable

$                                     6,140.00

   Bonds Payable

$                107,000.00

(Bonds payable issued at discount)

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