Question

Please give me the journal entry for the first interest payment on each of the following bond issues:

1. We issued bonds at 102% with a par of $1,000 a life of 20 years with an interest rate of 10%

2. We issued bonds at 98% with a par of $1,000 a life of 5 years with an interest rate of 9%

3. We issued bonds at 100% with a par of $1,000 a life of 2 years with an interest rate of 8%

Don't forget to amortize the premium or discount.

Answer 1

Answering to Q 1
	Dr	Cr
Bank	1020
To Bonds Payable		1000
To Premium on Bonds Isssued		20
Interest Expenses	100
To Bank		100
(Interest Paid)
Premium on Bonds Issued	1
To Interest Expenses		1
(Amortization of premium)
Answering to Q 2
Bank	980
Discount on Bonds Issued	20
To Bonds Payable		1000
Interest Expenses	90
To Bank		90
(Interest Paid)
Interest Expenses	4
To Discount on Bonds Issued		4
(Amortization of Discount)
Answering to Q 3
Bank	1000
To Bonds Payable		1000
Interest Expenses	80
To Bank		80
(Interest Paid)