Record the bond issue on January 1, 2015, and the first two semiannual interest
ID: 2448707 • Letter: R
Question
Record the bond issue on January 1, 2015, and the first two semiannual interest payments on June 30, 2015, and December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal Entry Worksheet:
TRANSACTION LIST:
1.
On January 1, 2015, White Water issues $430,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 4%, the bonds will issue at $478,152. Record the issuance of the bond.
2.
On January 1, 2015, White Water issues $430,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 4%, the bonds will issue at $478,152. Record the first semiannual interest payment.
3.
On January 1, 2015, White Water issues $430,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 4%, the bonds will issue at $478,152. Record the second semiannual interest payment.
Date General Journal Debit Credit
January 01,2015
June 30,2015
December 31,2015
Explanation / Answer
(1) 1.Jan,2015 Cash Account Dr. $478152
To Bond payable $430000
To premium on bond $ 48152
(Being Bond payable issued on premium)
(2) 30.June,2015 Interest Expense Account Dr. $9145
Premium on Bond Dr.$1605
To cash Account $10750
(being interest paid and premium on bond amortisied)
Note: total cash expenses (430000 * 5% * 6/12) = 10750
Less: premium amortisied(48152 / 30) = 1605
Interest expense 9145
useful life of bond is 15 year,and amortise over the life of bond will be 6 monthe for every year ,So amotisatio per period will be 30 per period(15year * 2 )
(3). 31 Dec,2015 Interest expenses Dr.$9145
premium on bond Dr.$1605
To cash $17050
( being interest paid and premium on bond amortisied)
Note: total cash expenses (430000 * 5% * 6/12) = 10750
Less: premium amortisied(48152 / 30) = 1605
Interest expense 9145
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