On October 1, 2016, Ball Company issued 10% bonds dated October 1, 2016, with a face amount of $190,000. The bonds mature in 11 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were $195,094.43 to yield 9.60%. Ball Company has a December 31 fiscal year-end and does not use reversing entries.

Required:

1.	Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the effective interest method.
2.	Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the straight-line method.

CHART OF ACCOUNTS

Ball Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
255	Bonds Payable
256	Premium on Bonds Payable
257	Discount on Bonds Payable
258	Interest Payable
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the effective interest method. Additional Instructions

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GENERAL JOURNAL

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Prepare journal entries to record the issuance of the bonds and the interest payments for 2016 and 2017 using the straight-line method. Additional Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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5
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