Woodwick Company issues 10 fiveyear bonds on December 31 201

Woodwick Company issues 10%, five-year bonds, on December 31, 2014, with a par value of $90,000 and semiannual interest payments. Semiannual Period-End Unamortized Premium (0) 12/31/2014 (1) 6/30/2015 (2) 12/31/2015 $7,911 7,120 6,329 Carrying Value $97,911 97,120 96,329 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on December 31, 2014. o) het peyment on Decembu 31, 2015.

Solution

Answer

Date

Accounts Title

Dr

Cr

Working

12/31/2014

Cash

97911

[Carrying value on 12/31/2014]

Bonds Payable

90000

[Par Value]

Premium on Bonds payable

7911

[Unamortised Premium]

6/30/2015

Interest Expense

3709

[Balancing figure]

Premium on Bonds Payable

791

Amortised premium [7911 – 7120]

Cash

4500

[90000 x 10% x 6/12]

12/31/2015

Interest Expense

3709

[Balancing figure]

Premium on Bonds Payable

791

Amortised premium [7911 – 7120]

Cash

4500

[90000 x 10% x 6/12]

Date	Accounts Title	Dr	Cr	Working
12/31/2014	Cash	97911		[Carrying value on 12/31/2014]
	Bonds Payable		90000	[Par Value]
	Premium on Bonds payable		7911	[Unamortised Premium]
6/30/2015	Interest Expense	3709		[Balancing figure]
	Premium on Bonds Payable	791		Amortised premium [7911 – 7120]
	Cash		4500	[90000 x 10% x 6/12]
12/31/2015	Interest Expense	3709		[Balancing figure]
	Premium on Bonds Payable	791		Amortised premium [7911 – 7120]
	Cash		4500	[90000 x 10% x 6/12]