Question
For the situations below, record the appropriate journal entries. To prepare each required journal entry: Click on a cell in the Account Name column and
For the situations below, record the appropriate journal entries.
To prepare each required journal entry:
- Click on a cell in the Account Name column and select from the option list the appropriate account. An account may be used once, more than once, or not at all.
- Enter the corresponding debit or credit amount in the associated column.
- Round all amounts to the nearest whole number.
- Not all rows in the table might be needed to complete each journal entry.
- If no journal entry is needed, check the No entry required box at the top of the table as your response.
1. Prepare the journal entry to record the issuance of the bonds on January 1, Year 1.
No Entry Required
Account Name | Debit | Credit |
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2. Prepare the journal entry to record the payment of interest on June 30, Year 1.
No Entry Required
Account Name | Debit | Credit |
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3. Calculate the amounts requested below for Stopaz. Enter amounts as positive values rounded to the nearest dollar. If your response is zero, enter a zero (0).
Amount | |
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Bond interest expense accrual for the 6 months ended June 30, Year 2. |
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Premium amortized for the 6 months ended June 30, Year 2. |
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MEMO
To: Jane Melcher, CEO, Stopaz Co.
From: Marty Stevenson, CFO, Stopaz Co.
Date: January 1, Year 1
Jane,
We issued 5-year, 8% bonds to fund recent projects. The bonds have a face amount of $200,000 and pay interest semi-annually on June 30 and December 31. The market interest rate was 4% at the date of issue, and the proceeds were $235,931.
We will use the effective interest method for amortization and maintain a separate ledger account for each bond.
Regards,
Marty
Bong Issue cost expense
Bond Payable
Cash
Discount on bounds payable
Premium on bound payable
Unamortized bound issue costs
No entry
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