Exercise 14-4 Marin Company issued $444,000 of 10%, 20-year bonds on January 1,

Question

Exercise 14-4 Marin Company issued $444,000 of 10%, 20-year bonds on January 1, 2017, at 104. Interest is payable semiannually on July 1 and January 1. Marin Company uses the straight-line method of amortization for bond premium or discount. Prepare the journal entries to record the following. (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.) (a) The issuance of the bonds. (b) The payment of interest and the related amortization on July 1, 2017. (c) The accrual of interest and the related amortization on December 31, 2017. Date Account Titles and Explanation Debit Credit 1/1/17 7/1/17 12/31/17

Explanation / Answer

a Jan-1-17 Cash 461760 =444000*1.04       Bonds payable 444000       Premium on Bonds payable 17760 b Jul-1-17 Interest expense 21756 Premium on Bonds payable 444 =17760/40       Cash 22200 =444000*10%/2 c Dec-31-17 Interest expense 21756 Premium on Bonds payable 444      Interest payable 22200

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