Dobbs Company issues 6%, two-year bonds, on December 31, 2018, with a par value of $106,000 and semi-annual interest payments.

Semi-annual Period-End Unamortized Discount Carrying Value
(0) 12/31/2018 $6,120 $99,880
(1) 6/38/2019 4,598 101,410
(2) 12/31/2019 3,868 102,940
(3) 6/38/2020 1,538 104,470
(4) 12/31/2020 0 106,000

Required:
Use the above straight-line bond amortization table and prepare journal entries for the following:
a. The issuance of bonds on December 31, 2018.
b. The first through fourth interest payments on each June 30 and December 31.
c. The maturity of the bonds on December 31, 2020.

Question

23-06-2021
Business

contestada

Dobbs Company issues 6%, two-year bonds, on December 31, 2018, with a par value of $106,000 and semi-annual interest payments.

Semi-annual Period-End Unamortized Discount Carrying Value
(0) 12/31/2018 $6,120 $99,880
(1) 6/38/2019 4,598 101,410
(2) 12/31/2019 3,868 102,940
(3) 6/38/2020 1,538 104,470
(4) 12/31/2020 0 106,000

Required:
Use the above straight-line bond amortization table and prepare journal entries for the following:
a. The issuance of bonds on December 31, 2018.
b. The first through fourth interest payments on each June 30 and December 31.
c. The maturity of the bonds on December 31, 2020.

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topeadeniran2 topeadeniran2 · Answer 1 · 2021-06-25T06:53:29+02:00

Answer: See explanation

Explanation:

a. The issuance of bonds on December 31, 2018.

Dec 31, 2018.

Debit Cash $99880

Debit Discount on bonds payable $6120

Credit Bonds payable $106000

(to record bond issue)

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

June 30

Debit Interest expense = $4718

Credit Discount on bonds payable = $1538

Credit Cash (106000×6%×6/12) = $3180

(To record interest)

Dec, 31.

Debit Interest expense = $4718

Credit Discount on bonds payable = $1538

Credit Cash (106000×6%×6/12) = $3180

(To record interest)

June 30

Debit Interest expense = $4718

Credit Discount on bonds payable = $1538

Credit Cash (106000×6%×6/12) = $3180

(To record interest)

Dec, 31

Debit Interest expense = $4718

Credit Discount on bonds payable = $1538

Credit Cash (106000×6%×6/12) = $3180

(To record interest)

c. The maturity of the bonds on December 31, 2020.

Dec 31,2020

Debit Bonds payable = $106000

Credit Cash = $106000

(To record retirement)