Brief Exercise 10-16 Sandhill Co. issues $4.10 million, 20-year, 8% bonds at 97,

Question

Brief Exercise 10-16 Sandhill Co. issues $4.10 million, 20-year, 8% bonds at 97, with interest payable on December 31, The straight-line method is used to amortize bond discount. Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 1 Interest Expense Credit Discount on Bonds Payable Cash SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the journal entry to record interest expense and bond discount amortization on December 31, 2017, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Dec. 31 Interest Expense Debit Credit Discount on Bonds Payable

Explanation / Answer

Date Account Titles and Explanation Debit Credit Jan. 1 Cash ($4,100,000 x 97%) $3,977,000 Discount on bonds payable $123,000   Bonds payable $4,100,000 Dec. 31 Interest expense $334,150 Cash ($4,100,000 x 8%) $328,000   Discount on bonds payable ($123,000 / 20) $6,150

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