Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 10 - Reporting and Analyzing Liabilities - Brief Exercises - Page 543: BE10-13

Answer

Step1: Jan.1 Cash - 4,120,000 dollars (Debit) Bonds payable - 4,000,000 dollars (Credit) Premium on bonds payable - 120,000 dollars (Credit) Step2: Bonds interest expense - 296,000 dollars (Debit) Premium on bonds payable - 24,000 dollars (Debit) Bonds interest payable - 320,000 dollars (Credit)

Work Step by Step

Step1: To record the sale of bonds at a premium. Step2: To record accrued bond interest and amortization of bonds premium.
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