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4. Keaubie Co. issued $150,000 8%, 12-year bonds payable at a price of 96, on Jan....

4. Keaubie Co. issued $150,000 8%, 12-year bonds payable at a price of 96, on Jan. 1a.Journalize the issuance of the bonds. Journalize the first annual interest payment and amortization of the discount or premium.c.Journalize the retirement of the bonds at maturity.

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Answer #1

Bond Issued at discount

Particulars Debit $ Credit $
January 1
Cash 144000
Discount on Bond Payable 6000
Bond payable 150000
( 15000 bond @ 96)

First annual Interest payable

Particulars Debit $ Credit $
December 31
Interest Expenses 12000
Discount on Bond Payable ( discount rate @ 4%) 480
Cash 11520
Interest annually @ 8%*150000 = 12000

Journal at maturity

Particulars Debit $ Credit $
Bond Payable 150000
Cash 150000
Being Bond Payable on Maturity
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