Question

Cougar Corp. sold 2-year, 5%, $200,000, bonds on January 1, 2020 for $208,000. Interest is paid...

Cougar Corp. sold 2-year, 5%, $200,000, bonds on January 1, 2020 for $208,000. Interest is paid semi-annually on June 30 and December 31.

2 points

What is the journal entry to record the issuance of the Bond on 1/1/2020?

8 points: Complete the amortization schedule below.

Period
ended

Cash Paid

Interest expense

amortization

Carrying
amount

06/30/2020

12/31/2020

06/30/2021

12/31/2021
Business   Accounting   
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Answer #1
Date General Journal Debit Credit
January 1, 2020 Cash 208000
Bonds payable 200000
Premium on bonds payable 8000

*since nothing is mentioned, straight line method of amortization is assumed.

Period ended Cash paid Interest expense Amortization Carrying amount
208000
06/30/2020 5000 3000 2000 206000
12/31/2020 5000 3000 2000 204000
06/30/2021 5000 3000 2000 202000
12/31/2021 5000 3000 2000 200000
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