Question

23.

[The following information applies to the questions displayed below.]

On January 1, 2018, Splash City issues $490,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.

Assuming the market interest rate on the issue date is 7%, the bonds will issue at $535,061.

Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

-Record the bond issue.

-Record the first semiannual interest payment.

-Record the second semiannual interest payment.

Answer 1

1. Issue of bonds on Jan.1, 2018
Date	Account Title	Debit	Credit
Jan.1,2018	Cash	535061
	Bonds Payable		490000
	Premium on bond issue		45061
2.Payment of interest and amortization oof Premium on Jun.30,2018
Date	Account Title	Debit	Credit
June 30,2018	Interest Expense	18727
	Premium on bond issue	873
	Cash		19600
3.Payment of interest and amortization oof Premium on December.31,2018
Date	Account Title	Debit	Credit
Dec.31, 2018	Interest Expense	18727
	Premium on bond issue	873
	Cash		19600

Amortization schedule

A	B	C	D	E	F	G
Date	Interest	Interest	Amortization	Credit balance	Credit in	Book
	payment	Expense	of bond	in bonds	Bonds	Value of
			premium	premium a/c	Payable	the bonds
	6.5% of F	6% of G	C - B		A/c	F + E
1/1/2018				45061	490000	535061
6/30/2018	19600	18727	-873	44188	490000	534188
12/31/2018	19600	18697	-903	43285	490000	533285
6/30/2019	19600	18665	-935	42350	490000	532350
12/31/2019	19600	18632	-968	41382	490000	531382
6/30/2020	19600	18598	-1002	40380	490000	530380
12/31/2020	19600	18563	-1037	39344	490000	529344
6/30/2021	19600	18527	-1073	38271	490000	528271
12/31/2021	19600	18489	-1111	37160	490000	527160
6/30/2022	19600	18451	-1149	36011	490000	526011
12/31/2022	19600	18410	-1190	34821	490000	524821
6/30/2023	19600	18369	-1231	33590	490000	523590
12/31/2023	19600	18326	-1274	32315	490000	522315
6/30/2024	19600	18281	-1319	30996	490000	520996
12/31/2024	19600	18235	-1365	29631	490000	519631
6/30/2025	19600	18187	-1413	28218	490000	518218
12/31/2025	19600	18138	-1462	26756	490000	516756
6/30/2026	19600	18086	-1514	25243	490000	515243
12/31/2026	19600	18033	-1567	23676	490000	513676
6/30/2027	19600	17979	-1621	22055	490000	512055
12/31/2027	19600	17922	-1678	20377	490000	510377
6/30/2028	19600	17863	-1737	18640	490000	508640
12/31/2028	19600	17802	-1798	16842	490000	506842
6/30/2029	19600	17739	-1861	14982	490000	504982
12/31/2029	19600	17674	-1926	13056	490000	503056
6/30/2030	19600	17607	-1993	11063	490000	501063
12/31/2030	19600	17537	-2063	9000	490000	499000
6/30/2031	19600	17465	-2135	6865	490000	496865
12/31/2031	19600	17390	-2210	4656	490000	494656
6/30/2032	19600	17313	-2287	2368	490000	492368
12/31/2032	19600	17233	-2368	0	490000	490000