Exercise 10-6 Straight-Line: Recording bond issuance and premium amortization LO
ID: 2573193 • Letter: E
Question
Exercise 10-6 Straight-Line: Recording bond issuance and premium amortization LO P1, P3
Woodwick Company issues 7%, five-year bonds, on December 31, 2016, with a par value of $99,000 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.
1/a. Record the issue of bonds with a par value of $99,000 cash on December 31, 2016.
2/b. Record the first interest payment on June 30, 2017.
3/c. Record the second interest payment on December 31, 2017.
Semiannual Period-End Unamortized Premium Carrying Value (0) 12/31/2016 $ 8,091 $ 107,091 (1) 6/30/2017 7,282 106,282 (2) 12/31/2017 6,473 105,473Explanation / Answer
Journal Entry a) Date Accounting titles & Explanations Debit Credit 12/31/2016 Cash 107,091 Premium on bonds payable 8,091 Bonds payable 99,000 b) 6/30/2017 interest expense 2,656 premium on bonds payable 809 cash (99000*7%*1/2) 3465 c) 12/31/2017 interest expense 2,656 premium on bonds payable 809 cash 3,465
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