Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par val

Question

Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par value of $110,000 and semiannual interest payments.

     
Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2017.

(b) The first interest payment on June 30, 2018.

(c) The second interest payment on December 31, 2018.

Semiannual Period-End Unamortized Discount Carrying Value (0) 12/31/2017 $ 6,933 $ 103,067 (1) 6/30/2018 6,066 103,934 (2) 12/31/2018 5,199 104,801

Explanation / Answer

Dec-31-17 Cash 103067 Discount on bonds payable 6933         Bonds payable 110000 June-30-18 Interest expense 4167         Discount on bonds payable 867 =6933-6066         Cash 3300 =110000*6%/2 Dec-31-18 Interest expense 4167         Discount on bonds payable 867 =6066-5199         Cash 3300

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