Assume
that the bonds in BE14–9 were issued at 98. Assume also that Grenier Limited
records the amortization using the straight-line method. Prepare the journal
entries related to the bonds for
In
BE Grenier Limited issued $300,000 of 10% bonds on January 1, 2011. The bonds
are due on January 1, 2016, with interest payable each July 1 and January 1.
The bonds are issued at face value. Prepare the company’s journal entries for
(a)
January 1,
(b)
July 1, and
(c)
December 3
(a)
|
Cash
($300,000 X .98)................................................
|
294,000
|
|
|
Bonds Payable.................................................
|
|
294,000
|
|
|
|
|
(b)
|
Interest
Expense..........................................................
|
15,600
|
|
|
Cash ($300,000 X 10% X 6/12).....................
|
|
15,000
|
|
Bonds Payable.................................................
|
|
600
|
|
($6,000 X 1/5 X .5 = $600)
|
|
|
|
|
|
|
(c)
|
Interest
Expense..........................................................
|
15,600
|
|
|
Interest Payable................................................
|
|
15,000
|
|
Bonds Payable.................................................
|
|
600
|