ning: 01.35:14 Su This Question: 5 pts This Test: 100 pts Johnson Company issued

Question

ning: 01.35:14 Su This Question: 5 pts This Test: 100 pts Johnson Company issued S80000, 2%, 10-year bonds payable at 88 on January 1, 2016 6. Journalize the issuance of the bonds payable on January 1, 2016 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight line amortization method) on July 1, 2016 ds payable was instead issued at 112 Journalize the issuance of the bonds payable and the payment of the trst somiannual nterest nd amortization of the bond discount or premium. (Record debits first, then credits. Select explanations on the last line of the jourmal entry ) 6. Journalize the issuance of the bonds payable on January 1, 2016 Date Accounts and Explanation Debit Credit 2016 of the bond discount or premium (using the straight ine amortization method) on July 1, 2016 Credit Date Accounts and Explanation 2016 Choose from any list or enter any number in the input fields and then continue to the next question

Explanation / Answer

6. Journal entry on issuance of bonds on January 1, 2016 Date Account title Debit Credit Jan.1, 2016 Cash 70400 Discount on bond issue 9600 Bonds payable 80000 7. Journal entry for interest payment and amortization of discount on july 1, 2016 Date Account title Debit Credit July1, 2016 Interest expense 1280 Discount on bond issue 480 Cash 800 Working: Maturity value of the bond 80000 Price of issue $88 Discount on issue $12 Discount % 12% Discount on the total value 9600 Term of the bond 10 years Interest period Semi annual Semiannual amortization 480 Rate of interest 2% Semi annual interest payment 800      (1% of 80,000) 8.a. Journal entry on issuance of bonds on January 1, 2016 Date Account title Debit Credit Jan.1, 2016 Cash 89600 Premium on bond issue 9600 Bonds payable 80000 8.b. Journal entry for interest payment and amortization of discount on july 1, 2016 Date Account title Debit Credit July1, 2016 Interest expense 320 Premium on bond issue 480 Cash 800 Working: Maturity value of the bond 80000 Price of issue $112 Premium on issue $12 Premium % 12% Premium on total value 9600 Term of the bond 10 years Interest period Semi annual Semiannual amortization 480 Rate of interest 2% Semi annual interest payment 800      (1% of 80,000)

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