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15 May, 03:33

Paulson Company issues 6%, four-year bonds, on December 31, 2018, with a par value of $200,000 and semiannual interest payments. Semiannual Period-End Unamortized Discount Carrying Value (0) 12/31/2015 $ 13,466 $ 186,534 (1) 6/30/2019 11,782 188,218 (2) 12/31/2019 10,098 189,902 Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2018.

(b) The first interest payment on June 30, 2019.

(c) The second interest payment on December 31, 2019.

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  1. 15 May, 04:21
    0
    Date 31 Dec 2018

    General journal:

    Debit Cash 186534

    Debit Discounts on bonds payable 13466

    Credit Bonds payable 200000

    Date June 30 2019

    Debit Interest expense (6000+1684) 7684

    Credit Cash 6000

    Credit Discounts on bonds payable (13466-11782) 1684

    Cash paid = Par value of bonds * interest rate * 6months/12months = 200000*0.06*6/12=6000

    Date Dec 31 2019

    Debit Interest expense 7684

    Credit Cash 6000

    Credit Discounts on bonds payable (13466-11782) 1684
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