Answer:
1. Date Account Title and Explanation Debit Credit
January 1 Cash $265,000
2016 Premium on bonds payable $15,000
Bonds payable $250,000
(To record Issuance of bonds )
2
. Date Account Title and Explanation Debit Credit
June 30 Bond interest expense $14,500
2016 Premium on bonds payable $500
Cash $15,000
(Interest on bond paid and Premium amortized)
3
. Date Account Title and Explanation Debit Credit
Dec 31 Bond interest expense $14,500
2016 Premium on bonds payable $500
Cash $15,000
(Interest on bond paid and Premium amortized)
4.
Date Account Title and Explanation Debit Credit
Dec 31 2030 Bonds payable $250,000
Cash $250,000
(Bond redeemed)
<em>Working </em>
Bond issue price (250000 / 100*106) $265,000
Face value <u>$250,000</u>
Premium on bonds payable $15,000
Number of Interest payments (15 years x 2) <u>30 period</u>
Discount/ premium to be amortized per Half year $500.00
Interest on bond $15,000.00
Interest expense to be recorded $14,500
(15000-500)
