(Entries for Bond Transactions- Straight Line)

Yellow Company issued (Sold) $500,000 of 10%, 20 year bonds on January 1, 2020 at 105. Interest is payable semiannually July 1 and January 1. Yellow Company uses the straight line method of amortization for premium or discount.

Instructions

Prepare the journal entries to record the following:

a. The issuance of the bonds.

b. The payment of interest and the related amortization on July 1, 2020.

c. The accrual of interest and the related amortization on December 31, 2020.