Discount Amortization On January 1, the first day of the fiscal year, a company issues a $1,550,000, 12%, five-year bond that pays semiannual interest of $93,000 ($1,550,000 × 12% × ½), receiving cash of $1,503,140. Required:   Journalize the first interest payment and the amortization of the related bond discount. Refer to the chart of accounts for the exact wording of the account titles. CHART OF ACCOUNTSGeneral Ledger   ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated Depreciation-Office Equipment   LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable   EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends   REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds   EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 541 Bad Debt Expense 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds JOURNAL ACCOUNTING EQUATION     DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1                 2                 3

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Discount Amortization

On January 1, the first day of the fiscal year, a company issues a $1,550,000, 12%, five-year bond that pays semiannual interest of $93,000 ($1,550,000 × 12% × ½), receiving cash of $1,503,140.
Required:
 

Journalize the first interest payment and the amortization of the related bond discount. Refer to the chart of accounts for the exact wording of the account titles.

CHART OF ACCOUNTSGeneral Ledger

  ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful Accounts
126 Interest Receivable
127 Notes Receivable
131 Merchandise Inventory
141 Office Supplies
191 Land
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
  LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
  EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
315 Treasury Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
  REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
  EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
541 Bad Debt Expense
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds
JOURNAL
ACCOUNTING EQUATION
 
  DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
 
 
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
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