Amazon rt 5 (Chapter 14) Saved Woodwick Company issues 8%, five-year bonds, on D

Question

Amazon rt 5 (Chapter 14) Saved Woodwick Company issues 8%, five-year bonds, on December 31, 2016, with a par value of $97000 and semiannual interest Preniun ()12/31/2816 (1) 6/30/2017 (2) 12/31/2817 58,051 7,246 6,441 $105,051 104,246 103,441 Use the above straight-line bond amortization table and prepare journal (a) The issuence of bonds on December 31, 2016 b) The first interest payment on June 30, 2017 (c) The second interest payment on December 31, 2017 Journal entry worksheet Record the issue of bonds with a par value of $97,000 cash on December 31, 2016. Enter debits befor Prey 3 oflE Nest > Esc F1 F2 F3 F4 F6 F7 F8 F9 F10 F1

Explanation / Answer

Date

Particulars

Debit ($)

Credit ($)

(a)

31.12.2016

Cash A/c

1,05,051

     To Premium on bond payable A/c

8,051

     To Bond Payable

97,000

(b)

30.06.2017

Bond Interest Expense A/c

3,075

Premium on bond payable A/c   

8,05

       To Cash A/c

3,880

©

31.12.2017

Bond Interest Expense A/c

3,075

Premium on bond payable A/c   

8,05

       To Cash A/c

3,880

Premium on bond = 105051 – 97000 = 8051

Interest paid = 97000 x 4% = 3880

Premium amount amortised over 10 Years = 8051/10 years = 805/year

Date

Particulars

Debit ($)

Credit ($)

(a)

31.12.2016

Cash A/c

1,05,051

     To Premium on bond payable A/c

8,051

     To Bond Payable

97,000

(b)

30.06.2017

Bond Interest Expense A/c

3,075

Premium on bond payable A/c   

8,05

       To Cash A/c

3,880

©

31.12.2017

Bond Interest Expense A/c

3,075

Premium on bond payable A/c   

8,05

       To Cash A/c

3,880

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