Question: (Entries for Bond Transactions—Straight-Line) Digital Company issued $600,000of10%20-year bonds on January 1, 2014, at 102Interest is payable semiannually on July 1 and January 1. Digital Company uses the straight-line method of amortization for bond premium or discount.Instructions: make journal entrys and show formulasPrepare the journal entries to record the following.(a) The issuance of the bonds.Jan 1, 14Account TitleAmountAccount TitleAccount Title(b) The payment of interest and related amortization on July 1, 2014.Jul 1, 14Account TitleFormulaAccount TitleFormulaAccount Title(c) The accrual of interest and the related amortization on December 31, 2014.Dec 31, 14Account TitleFormulaAccount TitleFormula Solution: Issue price of bond = 600,000 x 1.02 = 612,000 Face value of bond = 600,000 Premium on bond = 612, XXXXXXXXXX,000 = 12,000 01-Jan-14Cash Account$    612,000Bonds Payable$    600,000Premium on bonds payable$     12,000This document was truncated here because it was created in the Evaluation Mode.
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