Exercise 10-21 ble annually on December 31. straight-line method to amortize bon

Question

Exercise 10-21 ble annually on December 31. 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. (a) Dec. 31, 2016 Date Account Titles and Explanation Debit Credit (b) Dec. 31, 2017 (c) Dec. 31, 2031

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Dec 31,2016 Cash 444960 Discount on bonds payable 18540 Bonds payable 463500 (To record issue bonds payable) Dec 31,2017 Interest expense 33681   Discount on bonds payable (18540/15) 1236 Cash (463500*7%) 32445 (To record interest) Dec 31,2031 Bonds payable 463500 cash 463500 (To record maturity of bonds)

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