Question

Dobbs Company issues 6%, two-year bonds, on December 31, 2017, with a par value of $94,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2017		$	5,880		$	88,120
(1)	6/30/2018			4,410			89,590
(2)	12/31/2018			2,940			91,060
(3)	6/30/2019			1,470			92,530
(4)	12/31/2019			0			94,000

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

Required:
(a) The issuance of bonds on December 31, 2017.
(b) The first through fourth interest payments on each June 30 and December 31.
(c) Record the maturity of the bonds on December 31, 2019.

Answer 1

Journal entry :

Date	accounts & explanation	debit	credit
	Cash	88120
	Discount on bonds payable	5880
	Bonds payable		94000
	(To record bond issue)
	Interest expense	4290
	Discount on bonds payable		1470
	Cash (94000*.03)		2820
	(TO record first interest payment)
	Interest expense	4290
	Discount on bonds payable		1470
	Cash		2820
	(To record second interest payment)
	Interest expense	4290
	Discount on bonds payable		1470
	Cash		2820
	(To record third interest payment)
	Interest expense	4290
	Discount on bonds payable		1470
	Cash		2820
	(To record fourth interest payment)
	Bonds payable	94000
	Cash		94000
	(To record maturity of bonds)