Wildhorse o ssued $513, UUU 7% 3U-year bonds on January 2017 at IUS Interestis p

Question

Wildhorse o ssued $513, UUU 7% 3U-year bonds on January 2017 at IUS Interestis payable annually on Januar wild o seu ses a n armor at on or bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds (b) The accrual of interest and the premium amortization on December 31, 2017. (c) The payment of interest on January 1, 2018 (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. No. Date Account Titles and Explanation Debit Credit (a) Jan. 1, 2017 Cash Bonds Payable 513000 Premium on Bonds Payable (b) Dec. 31, 2017 (c) Jan. 1, 2018 (d) Jan. 1, 2047

Explanation / Answer

Jan-01 Cash 538650          Premium on bonds payable 25650          Bonds payable 513000 Dec-31-17 Interest expense 35055 Premium on bonds payable 855 =25650/30         Interest payable 35910 =513000*7% Jan-1-18 Interest payable 35910         Cash 35910 Jan-1-47 Bonds payable 513000         Cash 513000

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