Ayayai Corporation sold $3,240,000, 6%, 5-year bonds on January 1, 2017. The bon

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Ayayai Corporation sold $3,240,000, 6%, 5-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1. Ayayai Corporation uses the straight-line method to amortize bond premium or discount.

Problem 10-8A Ayayai Corporation sold $3,240,000, 6%, 5-year bonds on January 1, 2017, The bonds were dated January 1, 2017, and pay interest on January 1. Ayayai Corporation uses the straight-line method to amortize bond premium or discount. 6ation uses the straight-line Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2017, assuming that the bonds sold at 103. (Credit account titles are automatically indented when amount is entered Do not indent manually.) Date Account Titles and Expanation Debit Credit Jan. 1 Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Prepare journal entries to record the issuance of the bonds and bond interest expense for 2017, assuming that the bonds sold at 98. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Expanation Debit Credit Jan. 1 Dec. 31

Explanation / Answer

Date Account titles & Explanations Debit Credit 1-Jan Cash (3,240,000*1.03) 3337200 Premium on bonds 97,200 Bonds payable 3,240,000 31-Dec interest expense 174960 premium on bonds (97200/5) 19440 interest payable (3,240,000*6%) 194400 Date Account titles & Explanations Debit Credit 1-Jan Cash (3,240,000*.98) 3175200 Discount on bonds 64,800 Bonds payable 3,240,000 31-Dec interest expense 207360 discount on bonds (64800/5) 12960 interest payable (3,240,000*6%) 194400 1)          Balance Sheet (partial) for the year ending december 31,2017 Current liabilities interest payable 194400 long term liabilities Bonds payable 3,240,000 Add: Premium on bonds payable 77,760 3,317,760 2)          Balance Sheet (partial) for the year ending december 31,2017 Current liabilities interest payable 194400 long term liabilities Bonds payable 3,240,000 less: discount on bonds 51,840 3,188,160

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