Blossom Company issued $466,500, 7%, 15-year bonds on December 31, 2016, for $44
ID: 2510735 • Letter: B
Question
Blossom Company issued $466,500, 7%, 15-year bonds on December 31, 2016, for $447,840. Interest is payable annually on December 31. Blossom uses the straight-line 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 indent manually.)
No.
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2016
Dec. 31, 2017
Dec. 31, 2031
(a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2017. (c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.Explanation / Answer
Journal entry :
D
Date accounts & explanation debit credit Dec 31,2016 Cash 447840 Discount on bonds payable 18660 Bonds payable 466500 (To record issue bonds payable) Dec 31,2017 Interest expense 33899 Discount on bonds payable (18660/15) 1244 Cash (466500*7%) 32655 (To record interest) Dec 31,3031 Bonds payable 466500 Cash 466500 (To record bond redemption)