On January 1, Altman Company issued bonds that had a par valueof $53,500 with a stated interest rate of 4% and a 5 year maturitydate. The bonds pay interest semiannually on June 30 and December31.
The bonds are issued at 100 3/4.
a) Prepare the journal entries Altman Company mustrecord in its books at bond issuance and the first interest paymentdate. Altman Company uses the straight line method to amortize anydiscount or premium.
Date
Description
Debit
Credit
01/01
to record the sale of bonds at a premium (100 3/4 of parvalue)
06/30
to record the semi-annual interest payment &amortization of discount or premium on bonds
On January 1, Altman Company issued bonds that had a par valueof $53,500 with a stated interest rate of 4% and a 5 year maturitydate. The bonds pay interest semiannually on June 30 and December31.
The bonds are issued at 100 3/4.
a) Prepare the journal entries Altman Company mustrecord in its books at bond issuance and the first interest paymentdate. Altman Company uses the straight line method to amortize anydiscount or premium.
Date | Description | Debit | Credit |
|---|---|---|---|
01/01 | |||
to record the sale of bonds at a premium (100 3/4 of parvalue) | |||
06/30 | |||
to record the semi-annual interest payment &amortization of discount or premium on bonds | |||
Related questions
A company issued 10%, 5-year bonds with a par value of$2,000,000 on January 1, 2014. Interest is to be paid semiannuallyeach June 30 and December 31. The bonds were sold at $2,162,218based on an annual market rate of 8%. The company uses theeffective interest method of amortization.
(1) Complete the following amortization table for the semiannualpayment periods using the format shown below (round to the nearestdollar).
Semiannual Interest Period | Interest Paid | Interest Expense | Premium Amortization | Unamortized Premium | Carrying Value |
01/01/2014 | N/A | N/A | N/A | $162,218 | |
06/30/2014 | |||||
12/31/2014 | |||||
06/30/2015 |
Part 2 is complete, but I need help with the other sectionsplease!
Ike issues $260,000 of 9%, three-year bonds dated January 1,2015, that pay interest semiannually on June 30 and December 31.They are issued at $266,811. Their market rate is 8% at the issuedate.
1. Prepare the January 1, 2015, journal entryto record the bonds' issuance.
2. Complete the below table to calculate thetotal bond interest expense to be recognized over the bonds'life.
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3. Prepare an effective interest amortizationtable for the bonds' first two years. (Enter all amountspositive values.)
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4. Prepare the journal entries to record thefirst two interest payments.
5. Prepare the journal entry to record thebonds' retirement on January 1, 2017, at 98.
