Sanidas Company issued $500,000, 6%, 30-year bonds on January 1, 2012, at 103. I

Question

Sanidas Company issued $500,000, 6%, 30-year bonds on January 1, 2012, at 103. Interest is payable annually on January 1. Sanidas uses straight-line amortization for bond premium or discount. *Prepare the journal entries to record the following events. a) The issuance of the bonds b) The accrual of interest and the premium amoritization on December 31, 2012. c) The payment of interest on January 1, 2013. d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Explanation / Answer

) The accrual of interest and the premium amoritization on December 31, 2012. c) The payment of interest on January 1, 2013. d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded

The issuance of the Bonds.
Jan 1 -
Dr Cash $515000 ($500 000 x 1.03)
Cr Bonds payable $500,000, (always face value)
Cr Bonds premium $15000 (to be amortized over 60 periods)

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