Question

Bonds Payable Journal Entries; Effective Interest Amortization
On December 31, 2017, Kim Company issued $500,000 of five‑year, 12 percent bonds payable for $538,609, yielding an effective interest rate of ten percent. Interest is payable semiannually on June 30 and December 31. Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and premium amortization (effective interest method) on June 30, 2018, and (c) the semiannual interest payment and premium amortization on December 31, 2018. Round amounts to the nearest dollar.

General Journal
Date	Description	Debit	Credit
a.)
Dec.31	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	Bonds Payable
	To record issuance of bonds.
b.)
Jun.30	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	Premium on Bonds Payable
	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	To record semiannual interest payment and premium amortization.
c.)
Dec.31	Bond Interest Expense
	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	CashPremium on Bonds PayableBonds PayableBond Interest Expense
	To record semiannual interest payment and premium amortization.

Answer 1