On January? 31, 2016 Driftwood ?Logistics, Inc., issued five-year, 9?% bonds payable with a face value of $11,000,000.The bonds were issued at 93 and pay interest on January 31 and July 31. Driftwood Logistics, Inc., amortizes bond discount by the? straight-line method.
a. Record the issuance of the bond payable on January? 31, 2016.
b. Record the payment of semiannual interest and amortization of bond discount on July? 31,2016.
c. Record the interest accrual and discount amortization on December? 31, 2016. ?(Do not round intermediary calculations. Only round the final amount to the nearest whole? dollar.)
Journal entry :
|No||Date||Accounts & explanation||debit||credit|
|1||January 31,2016||Cash (11000000*.93)||10230000|
|Discount on bonds payable||770000|
|(To record bonds issue)|
|2||July 31, 2016||Interest expense||572000|
|Discount on bonds payable (770000/10)||77000|
|(To record interest)|
|3||Dec 31, 2016||Interest expense||476667|
|Discount on bonds payable (770000/60*5)||64167|
|Interest payable (11000000*9%*5/12)||412500|
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