a.What accounts are affected when recording the issue date of a discount bond? W

Question

a.What accounts are affected when recording the issue date of a discount bond? What accounts are affected when recording interest and amortization? Which accounts are credited and which accounts are debited when creating journal entries?

b.What accounts are affected when recording the issue date of a premium bond? What accounts are affected when recording interest and amortization? Which accounts are credited and which accounts are debited when creating journal entries?

c.What accounts are affected when a bond matures? Which accounts are credited and which accounts are debited when creating journal entries?

Explanation / Answer

Note: While recording interest and amortization, interest payable is credited if interest is accrued and cash is credited if interest is actually paid.

Accounts Affected Debit Credit a. Recording the issue date of a discount bond Cash Bonds Payable Discount on Bonds Payable Recording interest and amortization Interest expense Discount on Bonds Payable Cash/Interest Payable b. Recording the issue date of a premium bond Cash Premium on Bonds Payable Bonds Payable Recording interest and amortization Interest expense Cash/Interest Payable Premium on Bonds Payable c. Bond matures Bonds Payable Cash

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