QUESTION 3 Partially correct 1.67 points out of 2.00 Flag question Bonds Payable
ID: 2589025 • Letter: Q
Question
QUESTION 3 Partially correct 1.67 points out of 2.00 Flag question Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2014, Daggett Company issued $800,000 of ten-year, nine percent bonds payable for $662,361, yielding an effective interest rate of twelve percent. Interest is payable semiannually on June 30 and December 31. Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and discount amortization (effective interest method) on June 30, 2015, and (c) the semiannual interest payment and discount amortization on December 31, 2015. Round amounts to the nearest dollar General Journal Date Description Debit Credit Dec.31 Cash $ 662,361 Discount on Bonds Payable # 137,639 Bonds Payable 800,000 To record issuance of bonds. Jun.30 Bond Interest Expense $ Discount on Bonds Payable Cash 36,000 To record semiannual interest payment and discount amortization. Dec.31 Bond Interest Expense $Explanation / Answer
Date
Interest payment
Interest Expense
Amortization of Bond discount
Debit Balance in Bond discount
Credit Balance in the Bond Account payable
Book Value of Bonds
December 31, 2014
0
0
0
800000 – 662361 = 137639
800000
662361
June 30, 2015
800000*9%*1/2 = 36000
662361*12%*1/2 = 39742
39742 – 36000 = 3742
137639 – 3742 = 133897
800000
666103
December 31, 2015
800000*9%*1/2 = 36000
666103*12%*1/2 = 39966
39966 – 36000 = 3966
133897 – 3966 = 129931
800000
670069
Serial no.
Particulars
Debit
Credit
Cash
662361
0
Discounts on Bond payable
137639
0
Bonds payable
0
800000
Bond interest expense
39742
Discounts on Bond payable
3742
Cash
36000
Bond interest expense
39966
Discounts on Bond payable
3966
Cash
36000
Date
Interest payment
Interest Expense
Amortization of Bond discount
Debit Balance in Bond discount
Credit Balance in the Bond Account payable
Book Value of Bonds
December 31, 2014
0
0
0
800000 – 662361 = 137639
800000
662361
June 30, 2015
800000*9%*1/2 = 36000
662361*12%*1/2 = 39742
39742 – 36000 = 3742
137639 – 3742 = 133897
800000
666103
December 31, 2015
800000*9%*1/2 = 36000
666103*12%*1/2 = 39966
39966 – 36000 = 3966
133897 – 3966 = 129931
800000
670069
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