Woodwick Company issues 8%, five-year bonds, on December 31, 2016, with a par va

Question

Woodwick Company issues 8%, five-year bonds, on December 31, 2016, with a par value of $97,000 and semiannual interest payments.

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Semiannual Period-End Unamortized Premium Carrying Value (0) 12/31/2016 $ 8,051 $ 105,051 (1) 6/30/2017 7,246 104,246 (2) 12/31/2017 6,441 103,441

Explanation / Answer

Dec-31-16 Cash 105051        Bonds payable 97000        Premium on Bonds payable 8051 Jun-30-17 Interest expense 3075 Premium on Bonds payable 805 =8051-7246         Cash 3880 =97000*8%/2 Dec-31-17 Interest expense 3075 Premium on Bonds payable 805 =7246-6441         Cash 3880

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