Question

On the first day of the fiscal year, a company issues a $5,100,000, 10%, 4-year bond that pays semiannual interest of $255,000 ($5,100,000 × 10% × ½), receiving cash of $4,634,211.

Journalize the bond issuance. If an amount box does not require an entry, leave it blank.

	Cash
	Discount on Bonds Payable
	Bonds Payable

On the first day of the fiscal year, a company issues a $7,100,000, 11%, 9-year bond that pays semiannual interest of $390,500 ($7,100,000 × 11% × ½), receiving cash of $6,359,295.

Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Discount on Bonds Payable
	Cash

On the first day of the fiscal year, a company issues an $7,000,000, 12%, 5-year bond that pays semiannual interest of $420,000 ($7,000,000 × 12% × ½), receiving cash of $7,263,816.

Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Premium on Bonds Payable
	Cash

Answer 1

Journal entries
S.no.	Accounts ttle and explanations		Debit $	Credit $
a.	Cash account			4634211
	Discount on bonds payable		465789
	Bonds payable				5100000
	(for issuance of bonds)
b.	Interest expense			431650
	Discount on bonds payable			41150	(7100000-6359295)/18
	Cash account				390500
	(for interest expenses incurred)
c.	Interest expenses			393618
	Premium on bonds payable		26382		(263,816/10)
	Cash account				420000
	(for interest expense incurred)