Mitchell issued $200,000 8%, 10-year bonds payable at 96 on January 1, 2014. 6.

Question

Mitchell issued $200,000 8%, 10-year bonds payable at 96 on January 1, 2014. 6. Joumalize the issuance of the bonds payable on January 1, 2014 7. Journalize the payment of semiannual interest and amortization of the bond discount or premium (using the straight-line amortization method) on July 1, 2014 8. Assume the bonds payable was instead issued at 110 Journalize the issuance of the bonds payable and the payment of the first semiannual interest and amortization of the bond discount or premium 92 6. Journalize the issuance of the bonds payable on January 1, 2014

Explanation / Answer

6 Jan-01 Cash 192000 =200000*0.96 Discount on bonds payable 8000        Bonds payable 200000 7 Jul-01 Interest expense 8400          Discount on bonds payable 400 =8000/20          Cash 8000 =200000*8%/2 8 Jan-01 Cash 220000 =200000*1.1       Premium on bonds payable 20000        Bonds payable 200000 Jul-01 Interest expense 7000 Premium on bonds payable 1000 =20000/20          Cash 8000

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