Question

Woodwick Company issues 6%, five-year bonds, on December 31, 2016, with a par value of $98,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Premium			Carrying Value
(0)	12/31/2016		$	8,071		$	106,071
(1)	6/30/2017			7,264			105,264
(2)	12/31/2017			6,457			104,457

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

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Answer 1

		Debit	Credit
December 31, 2016	Cash	106071
	Bonds payable		98000
	Premium on Bonds payable		8071
June 30, 2017	Interest expense	2133
	Premium on Bonds payable	807		=8071-7264
	Cash		2940	=98000*6%/2
December 31, 2017	Interest expense	2133
	Premium on Bonds payable	807		=7264-6457
	Cash		2940	=98000*6%/2