Question

Dobbs Company issues 5%, two-year bonds, on December 31, 2016, with a par value of $95,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2016		$	5,900		$	89,100
(1)	6/30/2017			4,425			90,575
(2)	12/31/2017			2,950			92,050
(3)	6/30/2018			1,475			93,525
(4)	12/31/2018			0			95,000

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

Required:

(a) The issuance of bonds on December 31, 2016.

(b) The first through fourth interest payments on each June 30 and December 31.

(c) The maturity of the bond on December 31, 2018.

Answer 1

Journal Entries:
Date	Accounts title and explanations				Debit $	Credit $
Dec 31 2016	Cash Account Dr.				89100
	Discount on Bonds payable Dr.				5900
	Bonds payble					95000
June 30 2017	Interest expense Dr.				6225
	Cash Account					4750
	Discount on Bonds payable					1475
Dec 31 20 17	Interest expense Dr.				6225
	Cash Account					4750
	Discount on Bonds payable					1475
June 30 2018	Interest expense Dr.				6225
	Cash Account					4750
	Discount on Bonds payable					1475
Dec 31 2018	Interest expense Dr.				6225
	Cash Account					4750
	Discount on Bonds payable					1475
Dec 31 2018	Bonds payable Dr.				95000
	Cash Account					95000