Question

What is the journal entry and adj journal entry for this?

Your company issued 1,000, 2.9% bonds (face value of each bond is $1,000) at 96.8229 on July 1st, 2019. The bonds are due on July 1, 2024, with interest payable each January 1 and July 1. The market rate at the time of the bond issuance was 3.6 Percent. Use the effective-interest method to calculate both the interest expense and the amortization of the bond discount when each interest payment is made. [Adjusting Entry Required]

Answer 1

Date	Account Titles and Explanation	Debit	Credit
July 1, 2019	Cash	968,229		(1,000 x 1,000 x 96.8229/100)
	Discount on Bonds Payable	31,771
	Bonds Payable		1,000,000
Dec 31, 2019	Interest Expense	17,428		(968,229 x 3.6% x 1/12)
	Discount on Bonds Payable		2,928
	Interest Payable		14,500	(1,000,000 x 2.9% x 1/12)