Woodwick Company issues 9%, five-year bonds, on December 31, 2016, with a par va

Question

Woodwick Company issues 9%, five-year bonds, on December 31, 2016, with a par value of $104,000 and semiannual interest payments.

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Semiannual Period-End Unamortized Premium Carrying Value (0) 12/31/2016 $ 8,191 $ 112,191 (1) 6/30/2017 7,372 111,372 (2) 12/31/2017 6,553 110,553

Explanation / Answer

Journal entry :

No. Date accounts & explanation debit credit (a) dec 31,2016 Cash 112191       Premium on bonds payable 8191      Bonds payable 104000 (b) June 30,2017 Interest expense 3861 Premium on bonds payable 819     Cash (104000*9%*6/12) 4680 (c) Dec 31,2017 Interest expense 3861 Premium on bonds payable 819     Cash 4680

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