For something issued $50,000 of 10-year, 6% bonds payable on jn1 2006, pay interest each jan 1 and July 1 and amortizes discount and premium by the straight line method

How would you journalize bonds and first semiannual interest payments of issue at a price of 105... I'm not grasping how this is done? I changed the numbers around from my problem so that I can get an example and actually do mine myself cause I want to do it... not letting this one stomp me. We have eight lines to fill in for each ex. 8 lines for the price at 105... thanks for the help!! :confused:

it also asked for the issuance at par (maturity) value and at price of 95 but I understood those parts

But another thing it asks WHich bond price results in the most inters expense and explain in detail? That's all... please help?

If you did the one at 95, you should be able to do the one at 105. I assume you already realize it means 105%. That's the amount the bonds sold for, so that is the amount received in cash (debit). The bond face value is always the credit to Bonds Payable -- that payable has to be the amount that will be paid back when they mature, so that's why the face value. That will be true no matter what.

The difference is that now the cash is a higher amount than the bonds, instead of lower. So you have a missing credit, and you have a premium instead of a discount.

So the initial entry:
Dr. Cash 52,500
Cr. Bonds Payable 50,000
Cr. Premium on Bonds 2,500

I'm not quite sure why you have 8 lines. There's 3, leaving 5. You didn't mention the entry for the amortization, but I'll assume that's in there. You also didn't say how many interest payments. (You said payments, plural, but this entry is always the same.) But no matter how I look at it, can't come up with 5 lines left.

Anyway, the thing about a premium rather than a discount that gets confusing is because the amortization seems a little weird. Since I don't know what the 5 lines are supposed to be, I'll show two ways. Well, actually three. It's unfortunate that homework has to be done by the number of lines provided in some template, instead of just doing the dang thing. (I hate all that computerized stuff. I'd also suggest doing as much manually first as possible, without templates, because you'll learn it better. Just use the templates when you have to.)

Interest payments are all:
Dr. Interest Expense 1500
Cr. Cash 1500

You probably knew that part. Nothing different about it. The premium divides into 20 periods, making $125 each period. Whenever doing the amorization, reverse the premium or discount account. The other side of this entry is always Interest Expense, regardless whether it's debit or credit, and even if it feels like it's breaking some rule. Since the Premium is a credit, we have to debit it, hence:

Dr. Bond Premium 125
Cr. Interest Expense 125

The above two entries can be combined and done together, which many books do. Notice you have two things in Interest Expense. Those can be netted against each other, like this:
Dr. Interest Expense 1375
Dr. Bond Premium 125
Cr. Cash 1500

I don't like doing it that way.

You can also do the two interest payments separately from the amortization, and only do amortization once a year. If doing amortization only once a year, it's twice as much (250), but same entry:

Dr. Bond Premium 250
Cr. Interest Expense 250

(You're allowed to credit that interest expense, because the debit from the payment nets against it and reduces the expense amount. When you have a discount, it adds to the interest expense, which seems to make more sense to most people.)

You didn't mention an adjusting entry for the interest, but I'm still trying to come up with 5 lines. :-) (This is silly.)

So... you have the issue that interest is paid Jan. 1, but you have to accrue the second half of the year on Dec. 31.

Dr. Interest Expense 1500
Cr. Interest Payable 1500

(And you still have to amortize the premium, which you can do separate or combine with this entry.)

Then Jan 1:
Dr. Interest Payable 1500
Cr. Cash 1500

Ooooh, five lines:

July 1
Dr. Interest Expense 1500
Cr. Cash 1500

Dec 31
Dr. Interest Expense 1250
Dr. Bond Premium 250
Cr. Interest Payable 1500

I'll let you see if you can figure out how I got that in 5 lines. :p But, wow, got to repeat that's just so silly to have to worry about that.