Question

Woodwick Company issues 8%, five-year bonds, on December 31, 2016, with a par value of $97,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Premium			Carrying Value
(0)	12/31/2016		$	8,051		$	105,051
(1)	6/30/2017			7,246			104,246
(2)	12/31/2017			6,441			103,441

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Answer 1

Dec-31-16	Cash	105051
	Bonds payable		97000
	Premium on Bonds payable		8051
Jun-30-17	Interest expense	3075
	Premium on Bonds payable	805		=8051-7246
	Cash		3880	=97000*8%/2
Dec-31-17	Interest expense	3075
	Premium on Bonds payable	805		=7246-6441
	Cash		3880