Woodwick Company issues 6 fiveyear bonds on December 31 2016

Woodwick Company issues 6%, five-year bonds, on December 31, 2016, with a par value of $98,000 and semiannual interest payments.

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

(a) The issuance of bonds on December 31, 2016.

(b) The first interest payment on June 30, 2017.

(c) The second interest payment on December 31, 2017.

Record the issue of bonds with a par value of $98,000 cash on December 31, 2016.

Record the first interest payment on June 30, 2017.

Record the second interest payment on December 31, 2017.

Semiannual Period-End	Unamortized Premium	Carrying Value
(0)	12/31/2016		$	8,071		$	106,071
(1)	6/30/2017			7,264			105,264
(2)	12/31/2017			6,457			104,457

Solution

Dec-31-16 Cash 106071       Bonds payable 98000       Premium on Bonds payable 8071 30-Jun-17 Interest expense 2133 Premium on Bonds payable 807 =8071-7264        Cash 2940 =98000*6%/2 31-Dec-17 Interest expense 2133 Premium on Bonds payable 807 =7264-6457        Cash 2940