Problem 10-5A Sandhill Co. sold $6,600,000, 7%, 15-year bonds on January 1, 2017

Question

Problem 10-5A

Sandhill Co. sold $6,600,000, 7%, 15-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on December 31. The bonds were sold at 96.

Problem 10-5A Sandhill Co. sold $6,600,000, 796, 15-year bonds on January 1, 2017, The bonds were dated January 1, 2017, and pay interest on December 31, The bonds were sold at 96. Prepare the journal entry to record the issuance of the bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1

Explanation / Answer

Journal entry to record issuance of the bonds on Jan.1,2017 Date Accounts and Explanation Debit Credit Jan.1,2017 Cash $6,336,000 Discount on Bonds Payable $264,000 7% Bonds Payable $6,600,000 Presentation of bond liability at December 31,2017 Balance Sheet SANDHILL CO. Balance Sheet (Partial) as on Dec.31,2017 Long term debt 7% Bonds Payable $6,600,000 Less : Discount on bonds payable $246,400 $6,353,600 Journal entry to record redemption of bonds Date General Journal Debit Credit Jan.1,2019 7% Bonds Payable $6,600,000 Loss on bond redemption $492,800 Discount on Bonds Payable $228,800 Cash $6,864,000

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