vette Alonso Financial Accounting ACG 2022 Final ExamPart 10

vette Alonso Financial Accounting- ACG 2022 Final Exam-Part (10 points) Record the following transactions for Graber Industries. The company uses amortization method. January 1 bonds payable of $8,000,000 at 98. The bonds have a stated interest rate ot ey. and pay interest semi-annually on July 1 and January 1 Issued 10-year July 1 Made first semi-annual interest payment to bondholders and amortized discount December 31 Accrued interest and amortized discount.

Solution

Solution :

Journal Entries - Graber Industries
Date	Particulars	Debit	Credit
1-Jan	Cash Dr	$7,840,000.00
	Discount on bond payable Dr	$160,000.00
	To Bond Payable		$8,000,000.00
	(To record issue of bond at discount)
1-Jul	Interest Expense Dr	$248,000.00
	To Cash		$240,000.00
	To Discount on bond payable		$8,000.00
	(To record bond interest expense and discount amortization)
31-Dec	Interest Expense Dr	$248,000.00
	To Interest payable		$240,000.00
	To Discount on bond payable		$8,000.00
	(To record bond interest expense and discount amortization)