Question

On December 31, 2018, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Wintergreen received $139,875 when it issued the bonds (or $150,000 × .9325). After recording the related entry, Bonds Payable had a balance of $150,000 and Discounts on Bonds Payable had a balance of $10,125. Wintergreen uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2019.Complete the necessary journal entry for June 30, 2019 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer: Please see explanation column

Step-by-step explanation:

Journal entry for June 30

Date Amount Debit Credit

June 30 Bond Interest expense $5,756

Discount on Bonds Payable $506

Cash $5,250

Calculation:

Cash = 150,000 x 7%x 6/12 = $5,250

10-year bonds pay interest semiannually indicates 20 interest periods

Straight line Amortization of the discount =$10,125/20 = $506

Bond interest expense= Interest + amortization on discount

Interest = $150,000 x 7% x 6/12 = $5,250 + 506= $5,756.