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Keaubie Co. issued $175,000, 6%, 10-year bonds payable at a price of 94, on Jan. 1,...

Keaubie Co. issued $175,000, 6%, 10-year bonds payable at a price of 94, on Jan. 1, 2019 a. Journalize the issuance of the bonds b. Journalize the first semi - annual interest payment and amortization of the discount or premium.

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Answer #1
No. Account titles and explanation Debit Credit
a) Cash (175,000*94/100) $164,500
Discount on bonds payable (175,000-164,500) $10,500
Bonds payable $175,000
(To record issuance of the bonds)
b) Interest expense (5,250+525) $5,775
Discount on bonds payable (10,500/20) $525
Cash (175,000*6%*6/12) $5,250
(To record interest payment and amortization of discount)

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