Exercise 14-10 On January 1, 2017, Flint Company sold 11% bonds having a maturit

Question

Exercise 14-10

On January 1, 2017, Flint Company sold 11% bonds having a maturity value of $430,000 for $481,505, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Flint Company allocates interest and unamortized discount or premium on the effective-interest basis.

Date

Account Titles and Explanation

Debit

Credit

January 1, 2017

Exercise 14-10

On January 1, 2017, Flint Company sold 11% bonds having a maturity value of $430,000 for $481,505, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Flint Company allocates interest and unamortized discount or premium on the effective-interest basis.

Explanation / Answer

January 1, 2017 Cash 481505      Bonds payable 430000      Premium on Bonds payable 51505

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