Question

The Skysong Company issued $310,000 of 12% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 97.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Skysong Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Answer 1

Journal entry :

Date	accounts & explanation	debit	credit
2017 Jan 1	Cash a/c (310000*97/100)	300700
	Discount on bonds payable	9300
	Bonds payable		310000
	(To record issuance of bonds payable)
2017 July 1	Interest expenses a/c	19530
	Amortization discount on bonds payable (9300/10)		930
	Cash a/c (310000*12%*6/12)		18600
	((To record interest paid)
2017 Dec 31	Interest expenses	19530
	Amortization discount on bonds payable (9300/10)		930
	Interest payable		18600
	(To record interest payable)