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