Pizza Pier issues 9%, 10-year bonds with a face amount of $70,000 for $65,639 on
ID: 2595638 • Letter: P
Question
Pizza Pier issues 9%, 10-year bonds with a face amount of $70,000 for $65,639 on January 1, 2018. The market interest rate for bonds of similar risk and maturity is 10%. Interest is paid semiannually on June 30 and December 31.
1. Record the bond issue. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Record the first interest payment on June 30, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Cash a/c 65639 Discount on bonds payable 4361 Bonds payable 70000 (To record issuance of bonds payable) Interest expenses a/c (65639*10%*6/12) 3282 Cash a/c (70000*9%*6/12) 3150 Amortization of discount on bonds payable 132 (To record first interest payment)