Brief Exercise 10-17 Marin Inc. issues $5.4 million, 10-year, 8% bonds at 101, w

Question

Brief Exercise 10-17 Marin Inc. issues $5.4 million, 10-year, 8% bonds at 101, with interest payable on January 1 . The straight-line method is used to amortize bond premium. Your answer is partially correct. Try again. 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 Cash Debit Credit ? Bonds Payable 5,400,000 Premium on Bonds Payable SHOW LIST OF ACCOUNTS LINK TO TEXT

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Jan 1 Cash 5454000 Bonds payable 5400000 Premium on bonds payable 54000 (To record issue bonds payable) Dec 31 Interest expense 426600 Premium on bonds payable (54000/10) 5400 Interest payable (5400000*8%) 432000 (To record interest)

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