Question

Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $100,000 and semiannual interest payments.

Semiannual Period-End		Unamortized Discount			Carrying Value
(0)	January 1, issuance	$	6,733		$	93,267
(1)	June 30, first payment		5,891			94,109
(2)	December 31, second payment		5,049			94,951

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on January 1.
(b) The first interest payment on June 30.
(c) The second interest payment on December 31.

date	general journal	debit	credit
jan 01
June 30
dec 31

Answer 1

Date	General journal	Debit	Credit
Jan 01	Cash	93267
	Discount on Bonds payable	6733
	Bonds payable		100000
June 30	Interest expense	3842
	Discount on Bonds payable		842	=6733-5891
	Cash		3000	=100000*6%*6/12
Dec 31	Interest expense	3842
	Discount on Bonds payable		842	=5891-5049
	Cash		3000	=100000*6%*6/12