Polk Incorporated issued 184000 of 8 bonds on July 1 2016 fo

Polk Incorporated issued $184,000 of 8% bonds on July 1, 2016, for $190,999.07. The bonds were dated January 1, 2016, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 7%. Polk uses the effective interest method of amortization

Solution

Journal Entries :-

Amortization Schedule :-

Date	Particulars	Debit($)	Credit($)
July 1, 2016	Cash A/c Dr.	190999.07
	To Bonds Payable a/c		184000
	To Premium on Bonds Payable A/c ($190999.07-$184000)		6999.07
Dec. 31, 2016	Interest Expense A/c Dr. (($190999.07*7%)/2)	6684.97
	Premium on Bonds Payable a/c ($7360-$6684.97)	675.03
	To Cash A/c (($184000*8%)/2)		7360
June 30, 2017	Interest Expense A/c Dr. (($190324.04*7%)/2)	6661.34
	Premium on Bonds Payable A/c Dr ($7360-$6661.34)	698.66
	To Cash A/c (($184000*8%)/2)		7360