On January 1, 2019, Jackson Manufacturing issued $ 150,000 of 10%, 10-year bonds for $157,446. Interest...

On January 1, 2019, Jackson Manufacturing issued $ 150,000 of 10%, 10-year bonds for $157,446. Interest is payable semiannually on June 30 and December 31. Using the given information, answer the following. Show all work for credit. (Round all answers to two decimal places as appropriate.)

#1: Record the journal entry to account for the issuance of these bonds.

#2: Record the remaining journal entries in 2019 related to the bond issue. Assume that Jackson uses the straight-line method to account for amortization.

Solutions

Expert Solution

Journal

Date	Account title	Debit	Credit
January 1, 2019	Cash	$157,446
	Bonds payable		$150,000
	Premium on bonds payable		$7,446
	(To record issue of bonds at premium)

Par value of bonds = $150,000

Cash receipts from issue of bonds = $157,446

Premium on bonds payable = Cash receipts from issue of bonds - Par value of bonds

= $157,446 - $150,000

= $7,446

Journal

June 30, 2019	Interest expense	$7,128
	Premium on bonds payable	372
	Cash		$7,500
	(To record semi annual interest expense)

Semi annual interest payment on June 30, 2019 = Par value of bonds x Interest rate x 6/12

= 150,000 x 10% x 6/12

= $7,500

Semi annual amortization of bond premium = 7,446/20

= $372

December 31, 2019	Interest expense	7,128
	Premium on bonds payable	372
	Cash		$7,500
	(To record semi annual interest expense)

Kindly comment if you need further assistance. Thanks

ekkarill92 answered 1 year ago

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