A credit to Paid in Capital in excess of Par Value. Common Stock for 54,000 QUESTION 4 8 points Amwaj Company issund

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A credit to Paid in Capital in excess of Par Value. Common Stock for 54,000 QUESTION 4 8 points Amwaj Company issund 1210 year bonds with a par value of BD 1,000,000 on January 1, 2018. Interest is to be paid semiannually on each June 30 and December 31. The bonds are issued at BD 1,073,607 cash when the market rate for this bond is 10%. Required: A) Prepare the journal entry to record the issuance of the bonds on January 1, 2018 B) Prepare the journal entry to record the first semiannual interest payment on June 30, 2018 (assume that Amwaj uses the straight-line method of amortization of any discount or premium) C) Prepare the journal entry to record the retirement of the bonds at maturity (assume that all interest payments have already been made). For the toolbar.press ALT FTO POR ALTEN10 (Mac). B I 5 Paragraph Arial 14px T. XX a > x x TI ?

Help In Homework · Accepted Answer

Issue price of bonds = BD 1,073,607 Par Value of bonds = BD 1,000,000 Issue price is higher than par value, it means bonds are issued at premium. Premium on Bonds Payable = BD 1,073,607 - 1,000,000 = BD 73,607 Semi Annual period to maturity = 10 years * 2 = 20 Semi Annual Amortization of Bonds Premium (Straight line method) = Total Premium 73,607 / Semi Annual period to maturity 20 = BD 3,680.35 Date General Journal Debit Credit A) Jan.1, 2018 Cash BD 1,073,607 Bonds Payable BD 1,000,000 Premium on Bonds Payable BD 73,607 (To record issuance of bonds at premium) B) June.30, 2018 Interest Expense BD 56,319.65 Premium on Bonds Payable BD 3,680.35 Interest Payable or Cash (1,000,000 par value * coupon rate 12% * 1/2 half yearly) BD 60,000 (To record first semi annual interest payment) C) Dec.31, 2027 Bonds Payable BD 1,000,000 Cash BD 1,000,000 (To record retirement of bonds at maturity)

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A credit to Paid in Capital in excess of Par Value

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	Date	General Journal	Debit	Credit
A)	Jan.1, 2018	Cash	BD 1,073,607
		Bonds Payable		BD 1,000,000
		Premium on Bonds Payable		BD 73,607
		(To record issuance of bonds at premium)

B)	June.30, 2018	Interest Expense	BD 56,319.65
		Premium on Bonds Payable	BD 3,680.35
		Interest Payable or Cash (1,000,000 par value * coupon rate 12% * 1/2 half yearly)		BD 60,000
		(To record first semi annual interest payment)

C)	Dec.31, 2027	Bonds Payable	BD 1,000,000
		Cash		BD 1,000,000
		(To record retirement of bonds at maturity)