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On 1/1/20X1, Illini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar
On 1/1/20X1, Illini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000.
Please refer to the instructions and the table in this question. Enter the correct journal entries with values:
Project 2.1 Part 1 Journal Entries
Date | Account Name (Debit) | Account Name (Credit) | Debit | Credit |
1/1/20X1 | Cash | [A] | ||
Bonds payable | [B] | |||
Premium on bonds | [C] | |||
Cash | [D] | |||
6/30/20X1 | Interest expense | [E] | ||
Premium on bonds | [F] | |||
Cash | [G] | |||
12/31/20X1 | Interest expense | [H] | ||
Premium on bonds | [I] | |||
Cash | [J] | |||
6/30/20X2 | Interest expense | [K] | ||
Premium on bonds | [L] | |||
Cash | [M] | |||
6/30/20X2 | Bonds payable | [N] | ||
Premium on bonds | [O] | |||
Cash | [P] | |||
Gain | [Q] |
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