Exercise 10-19 Your answer is correct. Gatlin Company issued $664,500, 10%, 15-year bonds on December 31, 2011, for $637,920. Interest is payable annually on December 31. Gatlin uses the straight-line method to amortize bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The payment of interest and the discount amortization on December 31, 2012. (c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Brief Exercise 10-15

Presented below is the partial bond discount amortization schedule for Syam Corp., which uses the effective-interest method of amortization.

Interest Periods		Interest to Be Paid		Interest Expense to Be Recorded		Discount Amortization		Unamortized Discount		Bond Carrying Value
Issue date								$64,730		$1,285,270
1		$67,500		$70,690		$3,190		61,540		1,288,460
2		67,500		70,865		3,365		58,175		1,291,825

 

Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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