Paulson Company issues 7%, four-year bonds, on December 31, 2013, with a par value of $91,000 and semiannual interest payments. Semiannual Period-End Unamortized Discount Carrying Value (0) 12/31/2013 $ 6,553 $ 84,447 (1) 6/30/2014 5,734 85,266 (2) 12/31/2014 4,915 86,085 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on December 31, 2013. (b) The first interest payment on June 30, 2014. (c) The second interest payment on December 31, 2014.

Paulson Company issues 7%, four-year bonds, on December 31, 2013, with a par value of $91,000 and semiannual interest payments.
   

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2013		$	6,553		$	84,447
(1)	6/30/2014			5,734			85,266
(2)	12/31/2014			4,915			86,085

   

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

(a)	The issuance of bonds on December 31, 2013.
(b)	The first interest payment on June 30, 2014.
(c)	The second interest payment on December 31, 2014.

Explanation: (b)

Discount on Bonds Payable = $6,553 – $5,734 = $819

Cash = $91,000 × 7% × 1/2 = $3,185

(c)

Discount on Bonds Payable = $5,734 – $4,915 = $819

Cash = $91,000 × 7% × 1/2 = $3,185