Question

Halsey Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal year 2017 Halsey had the following bond payable transactions:

January 2, issued ten, $1,000 bonds at 101. These 5-year bonds are dated January 1, 2017. The contract interest rate is 6%.  Interest is payable semi-annual on January 1 and July 1.

July 1, Halsey issued $400,000 of 10%, 10-year bonds.  The bonds are dated January 1, 2017 were issued at 90, and pay interest on July 1 and January 1.

October 1, Halsey issued 10-year bonds $10,000 face value bonds for $10,860 cash. The bonds have a stated rate of 8%. Interest is payable on October 1 and April 1.

Use this information to prepare General Journal entries for the three bonds issued and any interest accruals and payments for the fiscal year 2017. (Round all calculations to nearest whole dollar.)

Date	Account	Debit	Credit
1/2/17
7/1/17
7/1/17
10/1/17
12/31/17
12/31/17
12/31/17

Answer 1

Journal entries
Date	Accounts title and explanations				Debit $	Credit $
2-Jan	Cash Account Dr. (10*1000*101%)				10100
	5-year bonds payable Account					10000
	Premium on bonds payable					100
1-Jul	Cash account Dr. (400,000*90%)				360000
	Discount on Bonds payable Dr.				40000
	10 years bonds payable Account					400000
1-Jul	Interest expense Account Dr.				290
	Premium on Bonds payable (100/10)				10
	Cash account (10000*6%*6/12)					300
1-Oct	Cash Account Ddr.				10860
	8% 10-year bonds payable Account					10000
	Prermium on bonds payable Account					860
31-Dec	Interest expense Account Dr.				290
	Premium on Bonds payable (100/10)				10
	Interest payable (10000*6%*6/12)					300
31-Dec	Interest expense Account Dr.				18000
	Discount on Bonds payable(40000/20)				2000
	Interest payable (400000*10%*6/12)					20000
31-Dec	Interest expense Account Dr.				178.5
	Premium on Bonds payable (860/20*1/2)				21.5
	Interest payable (10000*8%*3/12)					200