bonds and bond interest expense for 2015, assuming that the bonds are sold at 10
ID: 2557286 • Letter: B
Question
bonds and bond interest expense for 2015, assuming that the bonds are sold at 102. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) no interest is Saberhagen Company sold $2,580,000, 8%, 10-year bonds on July 1, 2015. The bonds were dated July 1, 2015, and pay interest July 1 and January 1. Saberhagen Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30 accrued on Prepare all the necessary journal entries to record the i issuance of the Date Account Titles and Explanation July 1, 2015 Debit Credit Dec. 31, 2015 Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2015, assuming that the bonds are sold at 95. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1, 2015 Dec. 31, 2015 Show balance sheet presentation for the bonds at December 31, 2015. (For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2024.) Saberhagen Company Balance Sheet December 31, 2015 PremiumExplanation / Answer
Date Account titles & Explanations Debit Credit 1/1/2017 Cash (2,580,000*1.02) 2631600 premium on bonds payable 51,600 bonds payable 2,580,000 12/31/2015 interest expense 100620 premium on bonds payable(51600/20) 2580 interest payable (2580000*4%) 103200 Date Account titles & Explanations Debit Credit 1/1/2017 Cash (2,580,000*.95) 2451000 Discount on bonds payable 129,000 bonds payable 2,580,000 12/31/2015 interest expense 109650 discount on bonds payable(129000/20) 6450 interest payable (2580000*4%) 103200 Balance sheet premium current liabilities interest payable 103,200 long term liabilities bonds payable 2,580,000 Add: premium on bonds payble 49020 2,629,020 Balance sheet premium current liabilities interest payable 103,200 long term liabilities bonds payable 2,580,000 less: Discount on bonds payable 122,550 2,457,450
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