Exercise 10-6 Straight-Line: Recording bond issuance and discount amortization L
ID: 2472265 • Letter: E
Question
Exercise 10-6 Straight-Line: Recording bond issuance and discount amortization LO P1, P2
Paulson Company issues 6%, four-year bonds, on December 31, 2013, with a par value of $100,000 and semiannual interest payments.
The issuance of bonds on December 31, 2013.
1.Record the issue of bonds with a par value of $100,000 cash December 31, 2013.
2.Record the interest payment and amortization on June 30, 2014.
3.Record the interest payment and amortization on December 31, 2014.
Paulson Company issues 6%, four-year bonds, on December 31, 2013, with a par value of $100,000 and semiannual interest payments.
Explanation / Answer
Answer:(a)
Dr Cash 93,267
Dr Discount on Bonds Payable 6,733
Cr Bonds Payable 100,000
Answer:(b)
3% x 100,000 = $3,000 cash payment
6,733 - 5,891 = $842 Discount Amortization
3,000 + 842 = $3,842 Interest Expense
Dr Bond Interest Expense 3,842
Cr Cash 3,000
Cr Discount on Bonds Payable 842
Answer:(C)
Dr Bond Interest Expense 3,842
Cr Cash 3,000
Cr Discount on Bonds Payable 842
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