Question

Woodwick Company issues 9%, five-year bonds, on December 31, 2016, with a par value of $104,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Premium			Carrying Value
(0)	12/31/2016		$	8,191		$	112,191
(1)	6/30/2017			7,372			111,372
(2)	12/31/2017			6,553			110,553

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Answer 1

Journal entry :

No.	Date	accounts & explanation	debit	credit
(a)	dec 31,2016	Cash	112191
		Premium on bonds payable		8191
		Bonds payable		104000
(b)	June 30,2017	Interest expense	3861
		Premium on bonds payable	819
		Cash (104000*9%*6/12)		4680
(c)	Dec 31,2017	Interest expense	3861
		Premium on bonds payable	819
		Cash		4680