Paulson Company issues 7%, four-year bonds, on December 31, 2015, with a par value of $96,000 and semiannual interest payments

Paulson Company issues 7%, four-year bonds, on December 31, 2015, with a par value of $96,000 and semiannual interest payments.

   

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2015		$	6,653		$	89,347
(1)	6/30/2016			5,821			90,179
(2)	12/31/2016			4,989			91,011

     

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a)	The issuance of bonds on December 31, 2015.
(b)	The first interest payment on June 30, 2016.
(c)	The second interest payment on December 31, 2016.

Explanation:

(b)

Discount on Bonds Payable = $6,653 – $5,821 = $832

Cash = $96,000 × 7% × 1/2 = $3,360

 
(c)

Discount on Bonds Payable = $5,821 – $4,989 = $832

Cash = $96,000 × 7% × 1/2 = $3,360