Required information E10-14 (Supplement 10A) Recording the Effects of a Discount

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Required information E10-14 (Supplement 10A) Recording the Effects of a Discount Bond Issue and First Interest Payment and Preparing a Discount Amortization Schedule (Straight-Line Amortization) [LO 10-S1) The following information applies to the questions displayed below On January 1, when the market interest rate was 8 percent, Seton Corporation completed a $160,000, 6 percent bond Issue for $138,529. The bonds pay interest each December 31 and mature in 10 years. Seton amortizes the bond discount using the straight-line method 10-14 Part 1 and 2 equired: & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.) Journal entry worksheet Record the issuance of bonds for $138,529 with a face value of $160,000. Note Eter debts before credes January 01 Nex

Explanation / Answer

Journal entry :

Date account & explanation debit credit Jan 1 Cash 138529 Discount on bonds payable 21471 Bonds payable 160000 (To record bond issue) Dec 31 Interest expense 11747   Discount on bonds payable 2147 Cash (160000*6%) 9600 (To record interest)

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