Question

13- Seed Corporation issued $200,000 of 8% bonds at 99 on January 1, 2018. Interest is...

13- Seed Corporation issued $200,000 of 8% bonds at 99 on January 1, 2018. Interest is to be paid annually on December 31.

a) Prepare the Journal entry to record the issuance of the bond.

Date Description Debit Credit

b) Prepare the jornal entry for the straight-line amortization of the discount and the payment of the interest on December 31, 2018.

Date Description Debit Credit

c) Prepare the jornal entry for the straight-line amortization of the Discount and the payment of the interest on December 31, 2019.

Date Description Debit Credit


d) What will be the balance of the bond principal due on December 31, 2027?

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Answer #1
Account Debit Credit
a Cash 198,000
Discount on bonds payable        2,000
Bonds payable 200,000
b Interest expense      16,200
Cash      16,000
Discount on bonds payable           200
c Interest expense      16,200
Cash      16,000
Discount on bonds payable           200
d Balance 200,000

Straight line amortization = 2000/10 = 200

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