Principal amount:	$500,000
Sale price of bonds:	98
Denomination of bonds:	$1,000
Life of bonds:	10 years
Stated rate:	7%, payable semiannually on September 30 and March 31

1. Prepare journal entries for:

a. Issuance of the bonds at a discount.

b. Interest payment and discount amortization on the bonds on September 30.

c. Year-end adjustment on the bonds.

If an amount box does not require an entry, leave it blank.

1	a. 20-1 Apr. 1	Cash					1
2		Discount on Bonds Payable					2
3		Bonds Payable					3
4							4
5	b. Sept. 30	Bond Interest Expense					5
6		Discount on Bonds Payable					6
7		Cash					7
8							8
9	c. Dec. 31	Bond Interest Expense					9
10		Discount on Bonds Payable					10
11		Bond Interest Payable					11

Feedback