Foreman Company issued $800,000 of 10%, 20-year bonds on January 1, 2012, at XXXXXXXXXXto yield 8%....

Question

Foreman Company issued $800,000 of 10%, 20-year bonds on January 1, 2012, at XXXXXXXXXXto yield 8%. Interest is payable semiannually on July 1 and January 1.
Instructions
Prepare the journal entries to record the following.
(a) The issuance of the bonds.
(b) The payment of interest and the related amortization on July 1, 2012.
(c) The accrual of interest and the related amortization on December 31, 2012.

Robert · Accepted Answer

Journal Entries 
Issuance of Bonds 
Cash     958336 
Premium on Bonds Payable  158336 
Bonds Payable    800000
Interest Payment on July 1, 2012 
 Interest Expense  38333 
 Premium on Bonds Payable   1667 
  Cash     40000
Cash      = 800,000*.10/2 
  =40,000 
Interest Expense = 958336*.

Foreman Company issued $800,000 of 10%, 20-year bonds on January 1, 2012, at XXXXXXXXXXto yield 8%. Interest is payable semiannually on July 1 and January 1. Instructions Prepare the journal entries...

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