On December 31, 2009, Blair Company issued $800,000 of 20-year. I 1% bonds payab

Question

On December 31, 2009, Blair Company issued $800,000 of 20-year. I 1% bonds payable fo $754,784, yielding an effective interest rate of 12%. Interest is payable semiannually on Jun and December 31. Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and discount amortization (effective interest method) on June 2010, and (c) the semiannual interest payment and discount amortization on December 31, amounts to the nearest dollar General Journal Debit Credit Date a) Dec. 31 Cash Description Bond Interest Expense Answ To record issuance of bonds un 30 Cash To record semiannual interest payment and discount amortization Dec 31 Cash I To record semiannual interest payment

Explanation / Answer

journal entries :

(To record semiannual interest)

No Date Accounts & explanation Debit credit a) 2009 dec 31 Cash a/c 754784 Discount on bonds payable 45216      Bonds payable a/c 800000 (To record issuance of bonds payable) b) 2010 June 30 Interest expenses a/c (754784*6%) 45287      Amortization of discount on bonds payable 1287      Cash a/c (800000*5.5%) 44000 (To record semiannual interest payment) c) 2010 dec 31 Interest expenses a/c (754784-1287)*6% 45210     Amortization of discount on bonds payable 1210     Cash a/c 44000

(To record semiannual interest)

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.