Brief Exercise 10-16 Cullumber Company issues $2.30 million, 10-year 6% bonds at

Question

Brief Exercise 10-16 Cullumber Company issues $2.30 million, 10-year 6% bonds at 98, with interest payable on December 3. The straight ne method s used to amortize bond discount Your answer is partially correct. Try again. Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 1 Interest Expense Debit Credit 142000 Cash 138000 Discount on Bonds Pay 4000

Explanation / Answer

January 1.

Dr. Cash $2,254,000 ($2.3m x 0.98)
Dr. Discount on Bonds Payable $46,000 (amortized over 10 periods)
Cr. Bonds Payable $2,300,000

December 31.

Dr. Bond Interest Expense $142,600
Cr. Bonds discount $4,600 ($46,000 / 10)
Cr. Cash $138,000 ($2.3m x 6%)

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