Exercise 10-21 Crane Company issued S484 S00 10%, is year bonds on December 3, 2

Question

Exercise 10-21 Crane Company issued S484 S00 10%, is year bonds on December 3, 2016, for $465 120 Interest is payable annually on December 31. Crane uses the straight-ine method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not (a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2017 e The redemption of the bonds at maturity, assuming interest for the last interest period has been pald and

Explanation / Answer

No. Date Account Titles and Explanation Debit Credit (a) Dec. 31, 2016 Cash $465,120 Discount on Bonds Payable $19,380      Bonds Payable $484,500 (To record issuance of bonds) (b) Dec. 31, 2017 Interest Expense $49,742      Cash (484,500 x 10%) $48,450      Discount on Bonds Payable ($19,380 / 15 years) $1,292 (To record interest expense) ( c) Dec. 31, 2031 Bonds Payable $484,500 Cash $484,500 (To record bonds redemption)

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