Gaudette Inc. issued 3-year, 12-per cent bonds on January 1, 2016, the date of bond authorization. Semi-annual interest is payable on June 30 and December 31. Gaudette uses the straight-line method of amortization. The following journal entry records the payment of interest on December 31, 2016:
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2016 |
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Dec. 31 |
Interest Expense |
17,900 |
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Premium on Bonds |
100 |
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Cash |
18,000 |
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Required: Reconstruct the entry made to record the issuance of bonds on January 1, 2016.
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