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Unformatted text preview: Jan 1, 2007 Cash $540,000 Bond payable 500,000 Premium on Bonds 40,000 4. Prepare the journal entry for the first interest payment. Premium on bonds is amortized every time an interest payment is made. Therefore, $40,000 is divided by 10 since there are 10 interest payments. $4,000 is amortized every interest payment. July 1, 2007 Interest Expense 26,000 Premium on Bonds 4,000 Cash 30,000 This JE will be prepared whenever an interest payment is made. 5. Prepare the adjusting journal entry if the companys year end is December 31. You must record the amount of interest that will be paid out on January 1, 2008. Dec 31, 2007 Interest Expense 26,000 Premium on Bonds 4,000 Bond Interest Payable 30,000...
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- Fall '08