Question: Watson Corporation issued 500 000 of 8 10 year bonds on January

Watson Corporation issued $500,000 of 8%, 10-year bonds on January 1, 2011, at face value. The note requires annual interest payments each December 31. Costs associated with the bond issuance were $25,000. Watson follows private enterprise GAAP and uses the straight-line method to amortize bond issue costs. Prepare the journal entry for
(a) The January 1, 2011 issuance and
(b) The December 31, 2011 interest payment and bond issuance cost amortization.
(c) What are the general principles surrounding accounting for transaction costs associated with the issue of note or bonds?

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  • CreatedAugust 23, 2015
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