Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2
ID: 2584275 • Letter: B
Question
Bonds Payable Journal Entries; Effective Interest Amortization
On December 31, 2009, Blair Company issued $800,000 of 20-year, 11% bonds payable for $754,784, yielding an effective interest rate of 12%. 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, 2010, and (c) the semiannual interest payment and discount amortization on December 31, 2010. Round amounts to the nearest dollar.
General Journal
Date
Description
Debit
Credit
a.)
Dec.31
Cash
$Answer
$Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
To record issuance of bonds.
b.
Jun.30
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense.
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense.
Answer
Answer
Cash
Answer
Answer
To record semiannual interest payment and
discount amortization.
c.)
Dec.31
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Cash
Answer
Answer
To record semiannual interest payment.
General Journal
Date
Description
Debit
Credit
a.)
Dec.31
Cash
$Answer
$Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
To record issuance of bonds.
b.
Jun.30
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense.
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense.
Answer
Answer
Cash
Answer
Answer
To record semiannual interest payment and
discount amortization.
c.)
Dec.31
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Answer: Cash, Discount on Bonds Payable, Bonds Payable, Bond Interest Expense
Answer
Answer
Cash
Answer
Answer
To record semiannual interest payment.
Explanation / Answer
Dec.31 Cash 754784 Discount on bonds payable 45216 Bonds payable 800000 Jun.30 Interest expense 45287 =754784*12%/2 Discount on bonds payable 1287 Cash 44000 =800000*11%/2 Dec-31 Interest expense 45364 =(754784+1287)*12%/2 Discount on bonds payable 1364 Cash 44000