Cullum ber Company issued $453,000, 7% 15-year bonds on December 3, 2016, for $4

Question

Cullum ber Company issued $453,000, 7% 15-year bonds on December 3, 2016, for $43.880 Interest is payable annually on December, 3 .Cu umber uses the straight-line method to amortize 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 payment of interest and the discount amortization on December 31, 2017 (c) 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) Dec. 31, 2016 (b) Dec. 31, 2017 (c) Dec. 31, 2031

Explanation / Answer

Dec-31-16 Cash 434880 Discount on bonds payable 18120          Bonds payable 453000 Dec-31-17 Interest expense 32918         Discount on bonds payable 1208 =18120/15         Cash 31710 =453000*7% Dec-31-31 Bonds payable 453000         Cash 453000

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