Answer:
January 1, 2011
Dr Cash 760,000
Dr Discount on Bonds Payable 40,000
Cr Bonds Payable 800,000
December 31, 2011
Dr Bond Interest Expense 48,000
Cr Discount on Bonds Payable 8,000
Cr Bond Interest Payable 40,000
January 1, 2012
Dr Bond Interest Payable 40,000
Cr Cash 40,000
Explanation:
Powell Corporation Journal entries
January 1, 2011
Dr Cash 760,000
(800,000-40,000)
Dr Discount on Bonds Payable 40,000
Cr Bonds Payable 800,000
December 31, 2011
Dr Bond Interest Expense 48,000
Cr Discount on Bonds Payable 8,000
(40,000÷5)
Cr Bond Interest Payable 40,000
(5%×800,000)
January 1, 2012
Dr Bond Interest Payable 40,000
Cr Cash 40,000
Given Information
On January 1, 2019 issued bond $800,000 AT 5%.
5 year bonds dated January 1, 2019 at 95.
Date Account titles and Explanation Debit Credit
Jan 1, 2019 Cash ($600,000 * 95%) $570,000
Discount on bonds payable $30,000
Bonds payable $600,000
(To record sale of bonds at a discount)
Dec 31, 2019 Bond interest expense $36,000
Discount on bonds payable $6,000
($30,000 / 5 years)
Bond Interest payable ($600,000 * 5%) $30,000
(To record annual accrued bond interest
and amortization of bond discount)
Jan 1, 2020 Bond Interest payable $30,000
Cash $30,000
(To record payment of bond interest liability)
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