Question 4 Sunland Company sold $3,280,000 109 10-year bonds on january 1, 2017.

Question

Question 4 Sunland Company sold $3,280,000 109 10-year bonds on january 1, 2017. The bonds were dated January 2017 and pay nterest on January The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. Your answer is correct. 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 1. 1/1/17 Cash Debit Credit 3312800 Bonds Payable 3280000 Premium on Bonds Payable 32800 2. 1/1/17 Cash 3148800 Discount on Bonds Payable 131200 Bonds Payable 3280000

Explanation / Answer

Journal entry: Interest expense when Issue at 101. Dec31 2017 Interest expense Account Dr. 324720 Premium on Bonds payable Dr. 3280    Interest payable Account 328000 Interest expensnse when issue at 96. Dec31 2017 Interest expense Account Dr. 341120    Interest payable Account 328000    Discount on Bonds payable 13120

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