Exercise 10-12 Assume that the following are independent situations recently rep

Question

Exercise 10-12 Assume that the following are independent situations recently reported in the Wall Street Journal. 1, General Electric (GE) 7% bonds, maturing January 28, 2018, were issued at 110.00. 2. Boeing 7% bonds, maturing September 24, 2032, were issued at 98.00. Were GE and Boeing bonds issued at a premium or a discount? The General Electric bonds were issued at a and the Boeing bonds were issued at a SHOW LIST OF ACCOUNTS Prepare the journal entry to record the issue of each of these two bonds, assuming each company issued $600,000 of bonds in total. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 2

Explanation / Answer

The General Electric Bonds were issued at a premium and the boeing bonds were issued at a discount.

No. Account titles and explanation Debit Credit 1 Cash (110.00% X $600,000) $660,000 Bonds Payable $600,000 Premium on Bonds Payable $60,000 2. Cash (98.00% X $600,000) $588,000 Discount on Bonds Payable $12,000 Bonds Payable $600,000

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