Question

Paulson Company issues 6%, four-year bonds, on December 31, 2017, with a par value of $200,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2017		$	13,466		$	186,534
(1)	6/30/2018			11,782			188,218
(2)	12/31/2018			10,098			189,902

  
Use the above straight-line bond amortization table and prepare journal entries for the following.

(a) The issuance of bonds on December 31, 2017.

(b) The first interest payment on June 30, 2018.

(c) The second interest payment on December 31, 2018.

  

Answer 1

Date	Particulars	Dr. $	Cr. $
31.03.2017	Cash/Bank	186,534.00
	Discount On Bonds	13,466.00
	6% Bonds		200,000.00
	(Being Bonds issued at discount)
30.06.2018	Interest on Bonds	7,683.25
	Discount on Bonds ($13,466 / (4 Years * 2 Semi-year)		1,683.25
	Cash/Bank ($200,000 * 6% * 6/12 year)		6,000.00
	(Being bonds expense and Interest amortization recorded)
31.12.2018	Interest on Bonds	7,683.25
	Discount on Bonds ($13,466 / (4 Years * 2 Semi-year)		1,683.25
	Cash/Bank ($200,000 * 6% * 6/12 year)		6,000.00
	(Being bonds expense and Interest amortization recorded)

Note:

Dear Student, if u have any doubt plz feel free to reach me.