Question

The Colson Company issued $300,000 of 10% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 103. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually.

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	choose a transaction date

	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(b)	choose a transaction date

	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(c)	choose a transaction date

	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount

Answer 1

Par value of bonds = $300,000

Cash receipts from issue of bonds = 300,000 x 103%

= $309,000

Journal

January 1, 2020	Cash	309,000
	Bonds payable		300,000
	Discount on bonds payable		9,000
June 30, 2020	Interest expense	15,900
	Discount on bonds payable (9,000/10)		900
	Cash (300,000*10%*6/12)		15,000
Dec. 31, 2020	Interest expense	15,900
	Discount on bonds payable (9,000/10)		900
	Interest payable		15,000

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