1.The Ney Co. has a Dec. 31 year end. On June 30, 2016, Ney issues 20 ($ 10,000

Question

1.The Ney Co. has a Dec. 31 year end. On June 30, 2016, Ney issues 20 ($ 10,000 at a Price of $ 100). Interest is at 15% payable semi-annually on June 30 & Dec. 31. Prepare the J/E for the 6/30/16 issuance and the Dec. 31 bond interest. 2. If Ney Co. had a Sept. 30 year end , what should be the entry on 9/30/16 and the entry on Dec. 31, 2016? And assume the same fact in 1, except the bonds were issued at a price of $96. The bonds have a five year life. Straight-line amortization is applied. Prepare the Dec. 31 bond interest entry.

Explanation / Answer

Date Accounts Title Dr Cr 6/30/2016 Cash 10000 Bonds Payable 10000 31-Dec Interest expenses 750 Cash 750 b) Interest expenses 500 Interest payable (10000*15%*4/12) 500 c) Interest expenses 790 Discount on Bonds Payable(400/10) 40 Cash 750 if any doubt please comment

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