## Journal entry for amortization of bond discount

At the time of issue however, the market interest rate rose to 10 and the bond could fetch a knotts jelly gift baskets price of 92,420 only.
After six months, the issuer will make interest payments amounting to 300,000 (10,000 1,000 6/2).Straight line bond amortization schedule when bond issued at a premium.Dr, cr, bank 9,852,591, bond discount 147,409, bond payable 10,000,000, total bond liability equals 10 million.e.The interest payments of 4,500 (100,000 x 9 x 6/12) will be required on each June 30 and December 31 until the bond matures on December 31, 2021.The following example demonstrates the method.In effect, because the bonds were issued at a premium and the business received more cash than the par value of the bonds, the cost (interest) to the business is reduced each period by the amount of the premium amortized, this is demonstrated in the.The straight line bond amortization method simply involves calculating the total premium or discount on the bonds and then amortizing this to the interest expense account in equal farrell's gift card costco amounts over the lifetime of the bond.When the same amount of bond discount is recorded each year, it is referred to as straight-line amortization.
The discount on bonds payable is 120,000 117,848 2,152, and the initial bond accounting journal entry would be as follows: Bonds payable issued at a discount journal entry Account Debit Credit Cash 117,848 Bonds payable 120,000 Discount on bonds payable 2,152 Total 120,000 120,000 The.
If the 10,000 bonds are issued, total bond proceeds will be 9,852,591.

The difference between the face value of the bond and the bond price is called bond premium.The following T-account for Interest Expense shows the entries for the year 2017: The following T-account shows how the balance in Discount on Bonds Payable will be decreasing over the 5-year life of the bond.Dr, cr, interest expense 307,370, bond discount 7,370, bank 300,000 Because the bond discount has a debit balance, a credit to it reduces it balance and because the bond discount is a contra-account to the bond payables account, the carrying value of bond issued.An amortization schedule lists bond payments, bond discount amortization and interest expense for each period.The product of 10,000 number of bond and the bond face value of 1,000.In our example, the bond discount of 3,851 results from the corporation receiving only 96,149 from investors, but having to pay the investors 100,000 on the date that pune international marathon prize money the bond matures.
The final bond accounting journal would be to repay the par value of the bond with cash.
On January 1, 2017 the book value of this bond is 96,149 (the 100,000 credit balance in Bonds Payable minus the debit balance of 3,851 in Discount on Bonds Payable.).

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