Question

Presented below is a partial amortization schedule for Premium Foods:
Period Issue Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value
$ 85,959
1 $ 2,900 $ 2,586 $ 314 85,645
2 2,900 2,578 322 85,323
1. Record the bond issue assuming the face value of bonds payable is $76,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Record the first interest payment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Please Note the table for better understanding

Period  Issue   Cash  Paid   Interest  Expense  Decrease in     Carrying  

Date                                                                   Carrying Value    Value

                                                                                                       $85,959

1   $2,900           $2,586             $314                   $85,645        

2  $2,900           $2,578              $322                   $85,323

1)     Journal Entry                                     Debit         Credit

       Cash A/C                                           $85,959

           To Premium on Bonds payable $9,959

            To Bonds Payable                                          $76,000

2)     Journal Entry                               Debit           Credit

       Interest Expense                        $2,586

       Premium on Bonds Payable        $314

               To Cash                                                      $2,900