Question

Oriole Company issued $640,000, 10%, 10-year bonds on December 31, 2019, for $570,000. Interest is payable annually on December 31. Oriole Company uses the straight-line method to amortize bond premium or discount.

Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2019

Prepare the journal entry to record the payment of interest and the discount amortization on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020

Prepare the journal entry to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2029

Answer 1

--Journal entries

Date	Accounts title	Debit	Credit
31-Dec-19	Cash	$570,000
	Discount on Bonds Payable	$70,000
	Bonds Payable		$640,000
	(to record issuance)
31-Dec-20	Interest Expense	$71,000
	Discount on Bonds Payable ($70000/10 years)		$7,000
	Cash ($640000 x10%)		$64,000
	(to record interest payment)
31-Dec-29	Bonds Payable	$640,000
	Cash		$640,000
	(to record payment at maturity)