Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par val
ID: 2545928 • Letter: P
Question
Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par value of $105,000 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 $ 6,833 $ 98,167 (1) 6/30/2018 5,979 99,021 (2) 12/31/2018 5,125 99,875Explanation / Answer
Journal entries :
Date accounts & explanation debit credit Dec 31,2017 Cash 98167 Discount on bonds payable 6833 Bonds payable 105000 June 30, 2018 Interest expense 4004 Discount on bonds payable (6833-5979) 854 Cash (105000*3%) 3150 Dec 31,2018 Interest expense 4004 Discount on bonds payable (5979-5125) 854 Cash 3150