Love Corporation sold $2,050,000, 6%, 10-year bonds on January 1, 2010. The bond
ID: 2347291 • Letter: L
Question
Love Corporation sold $2,050,000, 6%, 10-year bonds on January 1, 2010. The bonds were dated January 1, 2010, and pay interest on January 1. Love Corporation uses the straight-line method to amortize bond premium or discount.Prepare journal entries as in the question above assuming that the bonds sold at 98. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Show the balance sheet presentation for the bond issue at December 31, 2010, using (1) the 102 selling price, and then (2) the 98 selling price. (Current liabilities and long term liabilities)
Explanation / Answer
helpfull Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2010, assuming that the bonds sold at 103. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Date Account/Description Debit or Credit Jan. 1 Cash $2,060,000 Bonds payable $2,000,000 Premium on bonds payable $60,000 Dec. 31 Bond interest expense $114,000 Premium on bonds payable $6,000 Bond interest payable $108,000
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