Question
In: Accounting
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 (600000*10%*1/2) | $ 30,000 | ||
| (To record interest payment ) | |||
| 31-12-2020 | Interest expense | $ 30,000 | |
| Cash (600000*10%*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 2 years agoRelated Solutions
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