On January 1, 2017, Powell Corporation issued $600,000, 5%, 5-year bonds dated January 1, 2017, at 95.
Question:
On January 1, 2017, Powell Corporation issued $600,000, 5%, 5-year bonds dated January 1, 2017, at 95. The bonds pay annual interest on January 1. The company uses the straight-line method of amortization and has a calendar year-end.
Prepare all the journal entries that Powell Corporation would make related to this bond issue through January 1, 2018. Be sure to indicate the date on which the entries would be made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
January 1, 2017
December 31, 2017(^to record sale of bonds at a discount)
(^To record annual accrued bond interest and amortization of bond discount)
January 1, 2018
Account Titles and Explanation Debit Credit
(^To record payment of bond interest liability)
