Question

Oriole Company issued $640,000, 10%, 10-year bonds on December 31, 2019, for $570,000. Interest is payable...

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

Homework Answers

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)
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