ork E1011 Supplement 10A Recording the Effects of a Premium

ork E10-11 (Supplement 10A) Recording the Effects of a Premium Bond Issue and First Interest Period (Straight-Line Amortization) [LO 10-S1) Grocery Corporation received $300.516 for 12.00 percent bonds issued on January 1, 2018, at a market interest rate of 9.00 percent The bonds had a total face value of $252,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the straight-line method to amortize the bond premlum Required: 1. & 2. Prepare the required journal entries to record the bond issuance and the first Interest payment on December 31. (f ne entry is required for a transactionJevent, select \"No Journal Entry Required\" in the first account field. Round your answers to the nearest whole dollar) Journal entry worksheet Record the issuance of bonds for $300,516 with a face value of $252,000 obe: Enter debits before credits Record enry Clear entry Next >

Solution

Journal entry :

Date	account & explanation	debit	credit
Jan 1	Cash	300516
	Bonds payable		252000
	Premium on bonds payable		48516
	(To record bond issue)
Dec 31	Interest expense	25388
	Premium on bonds payable (48516/10)	4852
	Cash (252000*12%)		30240
	(To record interest)