On January 1, Altman Company issued bonds that had a par value of $40,000 with a stated interest rate of 6% and a 5 year maturity date. The bonds pay interest semiannually on June 30 and December 31.
The bonds are issued at 104 3/4.
a) Prepare the journal entries Altman Company must record in its books at bond issuance and the first interest payment date. Altman Company uses the straight line method to amortize any discount or premium.
| Date | Description | Debit | Credit |
|---|---|---|---|
| 01/01 | |||
| 01/01 | |||
| 01/01 | |||
| 01/01 | to record the sale of bonds at a premium (104 3/4 of par value) | ||
| 06/30 | |||
| 06/30 | |||
| 06/30 | |||
| 06/30 | to record the semi-annual interest payment & amortization of discount or premium on bonds | ||