Manilow Company issued $497,000, 7%, 20-year bonds on January 1, 2014, at 102. I

Question

Manilow Company issued $497,000, 7%, 20-year bonds on January 1, 2014, at 102. Interest is payable semiannually on July 1 and January 1. Manilow uses straight-line amortization for bond premium or discount.

Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a) The issuance of the bonds. (b) The payment of interest and the premium amortization on July 1, 2014, assuming that interest was not accrued on June 30. (c) The accrual of interest and the premium amortization on December 31, 2014. (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. Manilow Company issued $497,000, 7%, 20-year bonds on January 1, 2014, at 102. Interest is payable semiannually on July 1 and January 1. Manilow uses straight-line amortization for bond premium or discount.

Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a) The issuance of the bonds. (b) The payment of interest and the premium amortization on July 1, 2014, assuming that interest was not accrued on June 30. (c) The accrual of interest and the premium amortization on December 31, 2014. (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Explanation / Answer

a Cash 506940      Bonds Payable 497000       Premium on Bonds Payable 9940 b Interest Expense 17147 Premium on Bonds Payable 249 =9940/40        Cash 17395 =497000*7%/2 c Interest Expense 17147 Premium on Bonds Payable 249        Interest Payable 17395 d Bonds Payable 497000        Cash 497000

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