Question

On January​ 31, 2018​, Logo ​Logistics, Inc., issued ten​-year, 9​% bonds payable with a face value of $7,000,000. The bonds were issued at 97 and pay interest on January 31 and July 31. Logo Logistics amortizes bond discounts using the​ straight-line method.

Record​ (a) the issuance of the bonds on January​ 31, 2018​, ​(b) the semiannual interest payment and amortization of the bond discount on July​ 31, 2018​, and​ (c) the interest accrual and discount amortization on December​ 31, 2018.

Answer 1

Date	Account Titles	Debit	Credit
Jan 31,2018	Cash	6790000		=7000000*0.97
	Discount on Bonds payable	210000
	Bonds payable		7000000
July​ 31, 2018	Interest expense	325500
	Discount on Bonds payable		10500	=210000/10*6/12
	Cash		315000	=7000000*9%*6/12
Dec 31, 2018	Interest expense	271250
	Discount on Bonds payable		8750	=210000/10*5/12
	Interest payable		262500	=7000000*9%*5/12