Answer: Please find answers in explanation column.
Explanation:
a. Journal to record The issuance of the bond
Date Account Titles Debit Credit
Jan. 1 Cash $618,000
9% Bonds payable $600,000
Premium on Bonds payable $18,000
Calculation
Cash = 600,000 x 103% =$618,000
b. The accrual of interest and the premium amortization on December 31, 2020
Date Account Titles Debit Credit
Dec. 31 Interest expense $53,100
Premium on Bonds payable $900
Interest payable $54,000
Calculation
Interest = 600,000 x 9% = $54,000
Premium on bonds = 18,000 /20 = $900
Interest expense=$54,000- $900=$53,100
c.Journal to record The payment of interest on January 1, 2021. Date Account Titles Debit Credit
Jan. 1 Interest payable 54000
Cash 54000
d) Journal to record The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.
Date Account Titles and Explanation Debit Credit
Jan. 1, 2 Bonds payable $600,000
Cash $600,000
