How is the amount of each semiannual interest will be made on these bonds over t
ID: 2452044 • Letter: H
Question
How is the amount of each semiannual interest will be made on these bonds over their life? Use the interest rates given to determine whether the bonds are issued at par, at discount, or at a premium. Compute the price of the bonds as of their issue date. Prepare the journal entry to record the bonds issuance. Paulson Company issues 6%, four-year bonds, on December 31, 2015, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal entries to record the issuance of bonds on December 31, 2015; the first interest payment on June 30, 2016; and the second interest payment on December 31, 2016. Dobbs Company issues 5%, two-year bonds, on December 31,2015, with a par value of $200.000 and semiannual interest payment. Use the following bond amortization table and prepare journal entries to record the issuance of bonds on December 31,2015; the firs thought fourth interest payments on each June 30 and December 31; and the maturity of the bond on December 31,2017.Explanation / Answer
Date Account Title and Explanations Debit Credit
December Cash Account 186,534
31, 2015 Discount on Bonds Payable 13,466
Bonds Payable 200,000
(being the issue of 6% Bonds at discount)
June 30, Bond Interest Expense 7,684
2016 Discount on Bonds Payable 1,684
Cash 6,000
(being the half yearly interest paid in cash and the amortization
of Discount on Bonds)
December Bond Interest Expense 7,684
31, 2016 Discount on Bonds Payable 1,684
Cash 6,000
(being the half yearly interest paid in cash and the amortization
of Discount on Bonds)
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