Sunday, 17 July 2016

Assume that the bonds in BE14–9 were issued at 98.

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