Question

Dobbs Company issues 6%, two-year bonds, on December 31, 2019, with a par value of $106,000 and semiannual interest payments. Semiannual Period-End Unamortized Discount Carrying Value (0) 12/31/2019 $ 6,120 $ 99,880 (1) 6/30/2020 4,590 101,410 (2) 12/31/2020 3,060 102,940 (3) 6/30/2021 1,530 104,470 (4) 12/31/2021 0 106,000 Use the above straight-line bond amortization table and prepare journal entries for the following. Required: (a) The issuance of bonds on December 31, 2019. (b) The first through fourth interest payments on each June 30 and December 31. (c) Record the maturity of the bonds on December 31, 2021

Answer 1

--Required journal entries

Date	Accounts title	Debit	Credit
31-Dec-19	Cash	$99,880
	Discount on Bonds Payable	$6,120
	Bonds Payable		$106,000
	(to record issuance)
30-Jun-20	Interest Expense	$4,710
	Discount on Bonds Payable		$1,530
	Cash ($106000 x 6% x 6/12)		$3,180
	(to record interest #1)
31-Dec-20	Interest Expense	$4,710
	Discount on Bonds Payable		$1,530
	Cash ($106000 x 6% x 6/12)		$3,180
	(to record interest #2)
30-Jun-21	Interest Expense	$4,710
	Discount on Bonds Payable		$1,530
	Cash ($106000 x 6% x 6/12)		$3,180
	(to record interest #3)
31-Dec-21	Interest Expense	$4,710
	Discount on Bonds Payable		$1,530
	Cash ($106000 x 6% x 6/12)		$3,180
	(to record interest #1)
31-Dec-21	Bonds Payable	$106,000
	Cash		$106,000
	(to record maturity payment)