On January 1, 2018, Educators Credit Union (ECU) issued 8%, 20-year bonds payabl

Question

On January 1, 2018, Educators Credit Union (ECU) issued 8%, 20-year bonds payable with face value of $1,000,000. These bonds pay interest on June 30 and December 31. The issue price of the bonds is 109. Journalize the following bond transactions: (Click the icon to view the bond transactions.) (Assume bonds payable are amortized using the straight-line amortization method. Record debits first, then credits. Select explanations on the last line of the journal entry. Round your answers to the nearest whole dollar.) a. Jo More Info 2 Ja a. ssuance of the bonds on January 1, 2018. b. Payment of interest and amortization on June 30, 2018. c. Payment of interest and amortization on December 31, 2018 d. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded b. Jo Print Done 2018 Choose from any list or enter any number in the input fields and then click Check Answer 2

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Jan 1 Cash 1090000 Bonds payable 1000000 Premium on bonds payable 90000 (To record issue bonds payable) June 30 Interest expense 37750 Premium on bonds payable (90000/40) 2250 Cash (1000000*4%) 40000 (To record interest) Dec 31 Interest expense 37750 Premium on bonds payable 2250 Cash 40000 (To record interest) Dec 31,20370 Bonds payable 1000000 Cash 1000000 (To record retirement of bonds)

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