Woodwick Company issues 9 fiveyear bonds on December 31 2014

Woodwick Company issues 9%, five-year bonds, on December 31, 2014, with a par value of $109,000 and semiannual interest payments Semiannual Period-End Unamortized Premium Carrying Value (0) 12/31/2014 (1) 6/30/2015 (2) 12/31/2015 $8,291 7,462 6,633 $117,291 116,462 115,633 Use the above straight-line bond amortization table and prepare journal entries for the following (a) The issuance of bonds on December 31, 2014 (b) The first interest payment on June 30, 2015 (c) The second interest payment on December 31, 2015 View transaction list Journal entry worksheet Record the issue of bonds with a par value of $109,000 cash on December 31, 2014

Solution

Journal entry :

Date	accounts and explanation	debit	credit
2014, dec 31	Cash	117291
	Bonds payable a/c		109000
	Premium on bonds payable		8291
	(To record issue bonds payable)
2015, June 30	Interest expenses a/c	4076
	Amortization of Premium on bonds payable (8291/10)	829
	Cash a/c (109000*9%*6/12)		4905
	(To record interest paid)
2015, Dec 31	Interest expenses	4076
	Amortization of Premium on bonds payable (8291/10	829
	Cash a/c		4905
	(To record interest paid)