Record the interest payment and amortization on December 31

Record the interest payment and amortization on December 31, 2018.

Record the interest payment and amortization on June 30, 2019.

Record the interest payment and amortization on December 31, 2019.

Exercise 14-5 Straight-Line: Recording bond issuance and discount amortization LO P1, P2 Dobbs Company issues 5%, two-year bonds, on December 31, 2017, with a par value of $90,000 and semiannual interest payments Semiannual Period-End Unamortized Discount Carrying Value (e) 12/31/2017 (1) 6/30/2018 (2) 12/31/2018 (3) 6/30/2019 (4) 12/31/2019 $5,800 4,350 2,900 1,450 $84,200 85,650 87,100 88,550 90,000 Use the above straight-line bond amortization table and prepare journal entries for the following Required (a) The issuance of bonds on December 31, 2017 (b) The first through fourth interest payments on each June 30 and December 31 (c) Record the maturity of the bonds on December 31, 2019

Solution

Workings Unampotized Discount = $5,800.00 Amortized per period = \"/\" by 4 Amortized Amount = $1,450.00 Coupon Amount = $ 90,000 X 5% = $4,500.00 Coupon Amt half yearly = $2,250.00 Add: Amortized Amount = $1,450.00 Interest Expenses per period = $3,700.00 For Issuance of Bonds Journal Entries Date Account Title and explanation Debit Credit Dec 31, 2017 Cash $                            84,200 Discount on issuance of Bonds $                              5,800       To 5% Bonds $                90,000 (to record the issuance of the bonds) June, 30 2018 Interest Expenses $                        3,700.00         To Cash $             2,250.00           To Discount on issaunce of bonds $             1,450.00 (To Record the Payment interest expenses ) Dec , 31 2018 Interest Expenses $                        3,700.00         To Cash $             2,250.00           To Discount on issaunce of bonds $             1,450.00 (To Record the Payment interest expenses ) June, 30 2019 Interest Expenses $                        3,700.00         To Cash $             2,250.00           To Discount on issaunce of bonds $             1,450.00 (To Record the Payment interest expenses ) Dec , 31 2019 Interest Expenses $                        3,700.00         To Cash $             2,250.00           To Discount on issaunce of bonds $             1,450.00 (To Record the Payment interest expenses ) Dec , 31 2019 5% Bonds $                      90,000.00         To Cash $          90,000.00 (To Record the payment of Bonds on maturity)