The Skysong Company issued $310,000 of 12% bonds on January 1, 2017. The bonds a

Question

The Skysong Company issued $310,000 of 12% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 97.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Skysong Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit 2017 Jan 1 Cash a/c (310000*97/100) 300700 Discount on bonds payable 9300 Bonds payable 310000 (To record issuance of bonds payable) 2017 July 1 Interest expenses a/c 19530 Amortization discount on bonds payable (9300/10) 930 Cash a/c (310000*12%*6/12) 18600 ((To record interest paid) 2017 Dec 31 Interest expenses 19530   Amortization discount on bonds payable (9300/10) 930 Interest payable 18600 (To record interest payable)

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