Bonds Payable Journal Entries; Straight-Line Interest AmortizationOn December 31, 2017, Brown Company issued $750,000 of 20-year, eight percent bonds payable for $621,307, 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 discount amortization (straight-line interest method) on June 30, 2018, and (c) the semiannual interest payment and discount amortization on December 31, 2018. Round answers to the nearest dollar. General Journal DateDescriptionDebitCredit(a)12/31/17CashAnswerAnswer AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer To record issuance of bonds at a discount. (b)06/30/18AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer CashAnswerAnswer To record semiannual payment and discount amortization. (c)12/31/18AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer AnswerBond interest expenseBonds payableCashDiscount on bonds payableAnswerAnswer CashAnswerAnswer To record semiannual payment and discount amortization.

Bonds payable refers to long-term debt basically issued by firms, governments, and hospitals.

Answered: $750,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Bonds Payable Journal Entries; Straight-Line Interest Amortization

On December 31, 2017, Brown Company issued $750,000 of 20-year, eight percent bonds payable for $621,307, 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 discount amortization (straight-line interest method) on June 30, 2018, and (c) the semiannual interest payment and discount amortization on December 31, 2018.

Round answers to the nearest dollar.

General Journal
	Date	Description	Debit	Credit
(a)	12/31/17	Cash	Answer	Answer
		AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		To record issuance of bonds at a discount.
(b)	06/30/18	AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		Cash	Answer	Answer
		To record semiannual payment and discount amortization.
(c)	12/31/18	AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		AnswerBond interest expenseBonds payableCashDiscount on bonds payable	Answer	Answer
		Cash	Answer	Answer
		To record semiannual payment and discount amortization.

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