On January 1, 2018, the date of bond authorization, Paquette Inc. issued 3-year, 12-per cent bonds. Semi-annual interest is payable on June 30 and December 31. Paquette uses the straight-line method of amortization. The following journal entry records the first payment of interest:
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2018 |
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June 30 |
Interest Expense |
17,000 |
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|
Cash |
16,500 |
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|
Discount on Bonds |
500 |
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Required: Reconstruct the journal entry made to record the issuance of bonds on January 1, 2018.
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