M10-15 (Supplement 10A) Recording Bond Issuance and Interest Payment (Straight-L

Question

M10-15 (Supplement 10A) Recording Bond Issuance and Interest Payment (Straight-Line Amortization) [LO 10-S1 Simko Company issued $710,000, 5-year, 5 percent bonds on January 1, 2015. The bonds were issued for $635,000 Interest is payable annually on December 31. Using straight-line amortization, prepare journal entries to record (a) the bond issuance on January 1, 2015, and (b) the payment of interest on December 31, 2015. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet × ebit Credit Record the issuance of bonds with a face value of $710,000 for $635,000 1 2 Record the interest payment on December 31, 2015 Note : = journal entry has been entered

Explanation / Answer

1. Record the issueance of bonds with a face value of $710,000 for $635,000. Date Account Titles and Explanation Debit Credit Jan. 1, 2015 Cash 635000 Discount on Bonds Payable (710,000 - 635,000) 75000       Bonds Payble 710000 2. Record the interest payment on December 31, 2015. Date Account Titles and Explanation Debit Credit Dec. 31, 2015 Interest Expense (35,500+15,000) 50500       Discount on Bonds Payable (710,000/5) 15000       Cash (710,000 x 5%) 35500

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