(Entries for Bond Transactions-Straight-Line) Celine Dion Company issued $600,000, of 10% 20 year boands on January 1, 2014 at Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount.
Question 2:
Assume the same information given above, except that Celine Dion Company uses the effective-interest men of amortization for bond premium or discount. Assume an effective yield of 9.7705%
Instructions:
Prepare the journal entries to record the following. (Round to the nearest dollar.)
(a) The issuance of the bonds.
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Jan 1, 14
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Cash
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612,000
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|
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Premium on Bond Payable
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12,000
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Bond Payable
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600,000
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(b) The payment of interest and related amortization on July 1, 2014.
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Jul 1, 14
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Intrest Expense
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29,898
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|
|
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102
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|
|
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Premium on Bond Payable
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Cash
|
|
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30,000
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(c) The accrual of interest and the related amortization on December 31, 2014.
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Dec 31, 14
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Intrest Expense
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29,893
|
|
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Premium on Bond Payable
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107
|
|
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Cash
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30,000
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Carrying amount of bonds at July 1, 2014:
Carrying amount of bonds at January 1,2014 $612,000
Amortization of bond premium 102