Monday, 17 March 2014

Simko Company issued $600,000, 10-year, 5 percent bonds on January 1, 2009. The bonds were issued for $580,000. Interest is payable annually on December 31. Required: Using straight-line amortization, prepare journal entries to record (a) the bond issuance on January 1, 2009, and (b) the payment of interest on December 31, 2009. (Omit the "$" sign in your response.) Date General Journal Debit Credit Jan. 1 2009 Cash Discount on bonds payable Bonds payable Dec. 31 2009 Interest expense Discount on bonds payable Cash ________________________________________ Explanation: Dec. 31 2009: Interest Expense: ($30,000 + $2,000) = 32,000 Discount on Bonds Payable: ($20,000 ÷ 10 years = $2,000 per year) Cash: ($600,000 × 5% × 12/12) = 30,000


Simko Company issued $600,000, 10-year, 5 percent bonds on January 1, 2009. The bonds were issued for $580,000. Interest is payable annually on December 31.


Required:
Using straight-line amortization, prepare journal entries to record (a) the bond issuance on January 1, 2009, and (b) the payment of interest on December 31, 2009. (Omit the "$" sign in your response.)

Date
General Journal
Debit
Credit
Jan. 1 2009
  Cash



  Discount on bonds payable



       Bonds payable






Dec. 31 2009
  Interest expense



       Discount on bonds payable



       Cash



 

Explanation:
 
Dec. 31 2009:
Interest Expense: ($30,000 + $2,000) = 32,000
Discount on Bonds Payable: ($20,000 ÷ 10 years = $2,000 per year)
Cash: ($600,000 × 5% × 12/12) = 30,000