1.

Question 1

On 1/1/20X1, Illini issues 10% bonds dated 1/1/20X1, with a face amount of $60,000. The bonds mature on 12/31/20X4 (4 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31. Illini incurs a total of $2,000 debt issuance costs. After its third interest payment on 6/30/20X2, Illini buys back the bonds on the market for $61,000.

Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A].

Project 2.1 Part 1 Journal Entries

Date	Account Name (Debit)	Account Name (Credit)	Debit	Credit
1/1/20X1	Cash		[A]
		Bonds payable		[B]
		Premium on bonds		[C]
		Cash		[D]
6/30/20X1	Interest expense		[E]
	Premium on bonds		[F]
		Cash		[G]
12/31/20X1	Interest expense		[H]
	Premium on bonds		[I]
		Cash		[J]
6/30/20X2	Interest expense		[K]
	Premium on bonds		[L]
		Cash		[M]
6/30/20X2	Bonds payable		[N]
	Premium on bonds		[O]
		Cash		[P]
		Gain		[Q]