Award 0 out of 10.00 points Or, January 1, acompany isses bonds dated January1wn

Question

Award 0 out of 10.00 points Or, January 1, acompany isses bonds dated January1wn, a par value of S3 OOOO The borets matr·h5years. The contract rane is 7% and iteroraps/w The market ,ete is 6% ond the bonds are sold for $396.210 The journal erwy to recordthe frst interest payment usrg emerse interest method of ameruno notyon 30"dDnn d O debit Bond Interest Expense $11.886 30, debst Discount on Bonds Payable $1,413 70, credr Cash $13,300.00 debe Bond Iinterest Expense 14 92100, creds Premum on Bonds Perable $162100 red Coah 513,30000 $1 886 30, debit Pgum on Bonds Payabie $1,413 70 credit Cash $13,300 00 O debs Bond Interest Expense $11679.00 O debt Interest Payable $13,300 00, credit Cash $13.300 00 debs Premium on Bonds Payabie $162100, credit Cash $13.30000

Explanation / Answer

Debit Interest Expense $11886.30, Debit Premium on bonds payable $1413.70, Credit Cash 13,300.00

Explanation:

Interest Payable on bond - 380,000 X 7%/2 = 13,300.00

Effective Interest Expense - 396210 X6%/2 = 11,886.30

Amortised premium on bond payable = 1,413.70

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