Question

required information problem 14-4a (algo) straight-line: amortization of bond discount lo p2 (the following information applies to the questions displayed below.) legacy issues $680,000 of 6.5%, four - year bonds dated january 1, 2021, that pay interest semiannually on june 30 and december 31. they are issued at $645,669 when the market rate is 8%. problem 14-4a (algo) part 1 required: 1. prepare the january 1 journal entry to record the bonds issuance. view transaction list journal entry worksheet 1 record the issue of bonds with a par value of $680,000 on january 1, 2021 at an issue price of $645,669. note: enter debits before credits. date general journal debit credit january 01

Explanation:

Step1: Identify the cash received

The bonds are issued at $645,669, so the cash received is $645,669. We debit Cash for this amount.
Debit Cash $645,669

Step2: Identify the bond - payable amount

The par - value of the bonds is $680,000. We credit Bonds Payable for the par - value.
Credit Bonds Payable $680,000

Step3: Calculate the bond discount

The bond discount is the difference between the par - value and the issue price. Bond Discount=$680,000 - $645,669 = $34,331. We debit Discount on Bonds Payable for this amount.
Debit Discount on Bonds Payable $34,331

Answer:

Date	General Journal	Debit	Credit
	Discount on Bonds Payable	$34,331
	Bonds Payable		$680,000