Trog Industries pays and records the semiannual interest on its $520,000, 10-year, 6% bonds outstanding on July 1, 20X1. On the same date, amortization of the premium of $5,200 received on $104,000 of those bonds is recorded. Record the payment of bond interest for six months.Note: Enter debits before credits.DateGeneral JournalDebitCreditJuly 1, 20X1 Record entry to amortized premium.Note: Enter debits before credits.DateGeneral JournalDebitCreditJuly 1, 20X1

Here in this question, we are required to make journal entry for interest payment and discount amortization. When entity issue bond for less than the face value of bond then it is called issued at discount. On other hand if it is issued for more than the face value of bond then it is called issued at premium. There are two method to amortized discount/premium on issued on bond. i.e. straight line basis and effective interest rate basis. After basic understanding lets make a journal entry. Date General Journal Debit($) Credit($) July 1, 20X1 Interest expense A/C Dr. 15,600 To Cash A/C 15,600 (i.e. Being interest expense booked) Interest expense = $520,000 * 6% * 6 Months/12 Months = $15,600 Date General Journal Debit($) Credit($) July 1, 20X1 Interest expense A/C Dr. 260 To Discount on bonds payable A/C 260 (i.e. Being discount booked) Total discount amount = $5,200 Discount need to record semi annually of = $5,200 / (10 Years * 2 Times a year) = $260

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Trog Industries pays and records the semiannual interest on its $520,000, 10-year, 6% bonds outstanding on July 1, 20X1. On the same date, amortization of the premium of $5,200 received on $104,000 of those bonds is recorded.

Trog Industries pays and records the semiannual interest on its $520,000, 10-year, 6% bonds outstanding on July 1, 20X1. On the same date, amortization of the premium of $5,200 received on $104,000 of those bonds is recorded.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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