Asked by Teresa Salina on May 22, 2024
Verified
On April 1,a company issues 6%,10-year,$600,000 par value bonds that pay interest semiannually each March 31 and September 30.The bonds sold at $592,000.The company uses the straight-line method of amortizing bond discounts.Prepare the general journal entry to record the first interest payment on September 30.
Straight-Line Method
A depreciation technique that allocates an equal amount of depreciation expense for an asset over its useful life.
General Journal Entry
A record in the general journal that includes all the financial transactions of a company, showing accounts affected, amounts, and whether those amounts are debits or credits.
Amortizing
The process of gradually paying off a debt over time through regular payments.
- Master the technique of journalizing bond interest payment entries employing diverse amortization strategies.
Verified Answer
Cash Payment = $600,000 * 6% * 6/12 = $18,000Discount on Bonds Payable = ($600,000 - $592,000)/20 = $400
Interest expense = $18,000 + $400 = $18,400
Learning Objectives
- Master the technique of journalizing bond interest payment entries employing diverse amortization strategies.
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