25. 4 pnts The Wish Company issued $300,000, 10%, 10-year bonds on January1, 200

Question

25.

4 pnts

The Wish Company issued $300,000, 10%, 10-year bonds on January1, 2009, at 105. Interest is payable annually. Whish uses thestraight-line method of amortization and has a calendar yearend.

Instructions

Prepare all journal entries made in 2009 related to the bondissue.

25.

4 pnts

The Wish Company issued $300,000, 10%, 10-year bonds on January1, 2009, at 105. Interest is payable annually. Whish uses thestraight-line method of amortization and has a calendar yearend.

Instructions

Prepare all journal entries made in 2009 related to the bondissue.

Explanation / Answer

Issuing Bond: Debit: Cash 1.05 * 300,000 = 315,000 Credit: Bond Payable 300,000 Credit: Bond Premium 15,000 Interest Expense: Credit: Cash .1 * 300,000 = 30,000 Debit: Bond Premium 15,000 / 10 = 1,5000 Debit: Interest Expense 30,000 - 1,5000 = 28,500

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