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On the first day of the fiscal year, a company issues a $582,000, 10%, 10-year bond...

On the first day of the fiscal year, a company issues a $582,000, 10%, 10-year bond that pays semiannual interest of $29,100 ($582,000 x 10% x 1/2), receiving cash of $611,100. Journalize the entry to record the first interest payment and amortization of premium using the straight-line method.

If an amount box does not require an entry, leave it blank.

  

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Answer #1
Date Accounts Title and Explanation Debit Credit
On the date if issue Cash          611,100
     Bonds Payable    582,000
     Preimium on on bonds payable      29,100
(To record issue of bond at premium)
On First Interest Payment Interest Expense            27,645 (29100-1455)
Premium in bonds payable              1,455 (29100/20 semi annual)
     Cash      29,100
(To record interest expense)
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