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Lemon Company issued $800,000, 10%, 20-year bonds on January 1, 2021, to 104
Lemon Company issued $800,000, 10%, 20-year bonds on January 1, 2021, to 104. the
interest is paid on a monthly basis on July 1 and January 1. LEMON uses the method of
straight-line depreciation and calendar year
make the calculation using the straight line and calendar year amortisation method
Expert Solution
Journal Entries.
|
Date |
Account Titles and Explanation |
Debit |
Credit |
| Jan 1 | Cash (800,000*104/100) | $832,000 | |
| Premium on Bonds Payable | $32,000 | ||
| Bonds Payable | $800,000 | ||
| (To record issuance of bonds) | |||
| July 1 | Interest Expenses | $39,200 | |
| Premium on Bonds Payable ($32,000/(20*2)) | $800 | ||
| Cash ($800,000*10%*6/12) | $40,000 | ||
| (To record semi-annual amortization) |
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