Woodwick Company issues 7%, five-year bonds, on December 31, 2014, with a par value of $94,000 and semiannual interest payments

Woodwick Company issues 7%, five-year bonds, on December 31, 2014, with a par value of $94,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Premium			Carrying Value
(0)	12/31/2014		$	7,991		$	101,991
(1)	6/30/2015			7,192			101,192
(2)	12/31/2015			6,393			100,393

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

(a)	The issuance of bonds on December 31, 2014.
(b)	The first interest payment on June 30, 2015.
(c)	The second interest payment on December 31, 2015.

Explanation:

(b)

Premium on Bonds Payable = $7,991 – $7,192 = $799

Cash = $94,000 × 7% × 1/2 = $3,290

 
(c)

Premium on Bonds Payable = $7,192 – $6,393 = $799

Cash = $94,000 × 7% × 1/2 = $3,290