Answer:
1. January 01, 2021
Dr Cash 513,221
Cr Premium on Bonds Payable 43,221
Cr Bonds Payable 470,000
2. June 30, 2021
Dr Interest Expense 17,963
Dr Premium on Bonds Payable 837
Cr Cash 18,800
3 December 31, 2021
Dr Interest Expense 17,933
Dr Premium on Bonds Payable 867
Cr Cash 18,800
Explanation:
1. Preparation of the journal entry Record the bond issue on January 1, 2021
January 01, 2021
Dr Cash 513,221
Cr Premium on Bonds Payable 43,221
(513,221-470,000)
Cr Bonds Payable 470,000
(To Record the bond issue )
2. Preparation of the journal entry to record the first two semiannual interest payments
June 30, 2021
Dr Interest Expense 17,963
(513,221*7%*6/12)
Dr Premium on Bonds Payable 837
(18,800-17,963)
Cr Cash 18,800
(470000*8%*6/12)
(To record first two semiannual interest payments)
3.Preparation of the journal entry to record the first two semiannual interest payments
December 31, 2021
Dr Interest Expense 17,933
(513,221*7%*6/12)
Dr Premium on Bonds Payable 867
(18,800-17,963)
Cr Cash 18,800
(470000*8%*6/12)
(To record first two semiannual interest payments)
