Question

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

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.

Homework Answers

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
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