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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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