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sShannon Company issued $1,000,000, 8%, 10-year bonds on December 31, 2016, for $960,000. Interest is payable...

sShannon Company issued $1,000,000, 8%, 10-year bonds on December 31, 2016, for $960,000. Interest is payable annually on December 31. Shannon uses the straight-line method to amortize bond premium or discount.

(a) The issuance of the bonds.
(b) The payment of interest and the discount amortization on December 31, 2017.
(c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.
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Answer #1
No. Date Account Titles and Explanation Debit Credit
a. Dec. 31, 2016 Cash 960000
Discount on bonds payable 40000
Bonds payable 1000000
(To record the issuance of bonds)
b. Dec. 31, 2017 Interest expense 84000
Discount on bonds payable ($40000/10) 4000
Cash (8% x $1000000) 80000
(To record payment of interest and discount amortization)
c. Dec. 31, 2026 Bonds payable 1000000
Cash 1000000
(To record redemption of the bonds)
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