23. [The following information applies to the questions displayed below.] On Jan

Question

23.

[The following information applies to the questions displayed below.]

On January 1, 2018, Splash City issues $490,000 of 8% 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 7%, the bonds will issue at $535,061.

Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

-Record the bond issue.

-Record the first semiannual interest payment.

-Record the second semiannual interest payment.

Explanation / Answer

Amortization schedule

1. Issue of bonds on Jan.1, 2018 Date Account Title Debit Credit Jan.1,2018 Cash 535061 Bonds Payable 490000 Premium on bond issue 45061 2.Payment of interest and amortization oof Premium on Jun.30,2018 Date Account Title Debit Credit June 30,2018 Interest Expense 18727 Premium on bond issue 873 Cash 19600 3.Payment of interest and amortization oof Premium on December.31,2018 Date Account Title Debit Credit Dec.31, 2018 Interest Expense 18727 Premium on bond issue 873 Cash 19600

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