Harrison Company issued $600,000 of 10%, 20-year bonds on January 1, 2020. Interest is paid semiannually...

Harrison Company issued $600,000 of 10%, 20-year bonds on January 1, 2020. Interest is paid semiannually on July 1 and December 31 each year. Harrison Company uses the straight-line method of amortization for bond premium or discount.

B. Assume the bonds are issued at 100. Provide the journal entries for the issuance of the bonds and the first two interest payments. (3 points)

Solutions

Expert Solution

Date	Account Title	Debit	Credit
01-01-2020	Cash	$ 6,00,000
	Bonds payable		$ 6,00,000
	(To record issue of bonds)

01-07-2020	Interest expense	$ 30,000
	Cash (60000010%1/2)		$ 30,000
	(To record interest payment )

31-12-2020	Interest expense	$ 30,000
	Cash (60000010%1/2)		$ 30,000
	(To record interest payment )

Since bonds are issued at $100 i.e at face value there is no discount or premium on issue of bonds .

ekkarill92 answered 1 year ago

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