Question

Sylvestor Company issues 10%, five-year bonds, on December 31, 2016, with a par value of $100,000...

Sylvestor Company issues 10%, five-year bonds, on December 31, 2016, with a par value of $100,000 and semiannual interest payments.

Semiannual Period-End Unamortized Discount Carrying Value
(0) 12/31/2016 $ 7,360 $ 92,640
(1) 6/30/2017 6,624 93,376
(2) 12/31/2017 5,888 94,112

     
Use the above bond amortization table and prepare journal entries to record (a) the issuance of bonds on December 31, 2016; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.
  

record the issuance of bonds

Record the interest payment and amortization on June 30, 2017.

Record the interest payment and amortization on December 31, 2017.

Homework Answers

Answer #1
Journal entries:
Date Accounts title and explanations Debit $ Credit $
31.12.16 Cash Account Dr. 92640
Discount on bonds payable Account Dr. 7360
   Bonds payable Account 100000
30.06.17 Interest expense Account Dr. 5736
    Cash account (100000*10%*6/12) 5000
    Discount on bonds payable Account (7360/10) 736
31.12.17 Interest expense Account Dr. 5736
    Cash account (100000*10%*6/12) 5000
    Discount on bonds payable Account (7360/10) 736
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