Question 1 Sunland Company sold $3,280,000, 10%, 10-year bonds on January 1, 201

Question

Question 1 Sunland Company sold $3,280,000, 10%, 10-year bonds on January 1, 2017, The bonds were dated January 1, 2017, and pay interest on January 1, The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 101 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit

Explanation / Answer

No. Date Account Titles and Explanation Debit Credit 1. 1/1/17 Cash ($3,280,000 x 101%) $3,312,800 To Bond Payable $3,280,000 To Premium on issue of bonds $32,800 2. 1/1/17 Cash ($3,280,000 x 96%) $3,148,800 Discount on Bonds payable $131,200 Bonds payable $3,280,000

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