Halsey Company uses the straight-line method for amortization of all bond premiu
ID: 2391238 • Letter: H
Question
Halsey Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal year 2017 Halsey had the following bond payable transactions:
January 2, issued ten, $1,000 bonds at 101. These 5-year bonds are dated January 1, 2017. The contract interest rate is 6%. Interest is payable semi-annual on January 1 and July 1.
July 1, Halsey issued $400,000 of 10%, 10-year bonds. The bonds are dated January 1, 2017 were issued at 90, and pay interest on July 1 and January 1.
October 1, Halsey issued 10-year bonds $10,000 face value bonds for $10,860 cash. The bonds have a stated rate of 8%. Interest is payable on October 1 and April 1.
Use this information to prepare General Journal entries for the three bonds issued and any interest accruals and payments for the fiscal year 2017. (Round all calculations to nearest whole dollar.)
Date
Account
Debit
Credit
1/2/17
7/1/17
7/1/17
10/1/17
12/31/17
12/31/17
12/31/17
Date
Account
Debit
Credit
1/2/17
7/1/17
7/1/17
10/1/17
12/31/17
12/31/17
12/31/17
Explanation / Answer
Journal entries Date Accounts title and explanations Debit $ Credit $ 2-Jan Cash Account Dr. (10*1000*101%) 10100 5-year bonds payable Account 10000 Premium on bonds payable 100 1-Jul Cash account Dr. (400,000*90%) 360000 Discount on Bonds payable Dr. 40000 10 years bonds payable Account 400000 1-Jul Interest expense Account Dr. 290 Premium on Bonds payable (100/10) 10 Cash account (10000*6%*6/12) 300 1-Oct Cash Account Ddr. 10860 8% 10-year bonds payable Account 10000 Prermium on bonds payable Account 860 31-Dec Interest expense Account Dr. 290 Premium on Bonds payable (100/10) 10 Interest payable (10000*6%*6/12) 300 31-Dec Interest expense Account Dr. 18000 Discount on Bonds payable(40000/20) 2000 Interest payable (400000*10%*6/12) 20000 31-Dec Interest expense Account Dr. 178.5 Premium on Bonds payable (860/20*1/2) 21.5 Interest payable (10000*8%*3/12) 200
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