1.) Nocioni Company issued $1,000,000 of bonds on January 1, 2012. - Prepare the

Question

1.) Nocioni Company issued $1,000,000 of bonds on January 1, 2012.

- Prepare the journal entry to record the issuance of the bonds if they are issued at 100%, 98% and 103%.

- Prepare the journal entry to record the retirement of the bonds at maturity, assuming the bonds were issued at 100%

- Prepare the journal entry to record the retirement of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is $9,000.

- Prepare the journal entry to record the conversion of the bonds into 30,000 shares of $10 par value common stock. Assume the bonds were issued at par.

Explanation / Answer

Journal Entries Answer 1 Date Account titles Debit Credit Jan 1,2012 Cash 10,00,000.00 Bonds Payable 10,00,000.00 Jan 1,2012 Cash     9,80,000.00 Discount on Bonds        20,000.00 Bonds Payable 10,00,000.00 Jan 1,2012 Cash 10,30,000.00 Premium on bonds        30,000.00 Bonds Payable 10,00,000.00 Answer 2 Date Account titles Debit Credit Bonds Payable 10,00,000.00 Cash 10,00,000.00 Answer 3 Date Account titles Debit Credit Bonds Payable 10,00,000.00 Premium on Bonds           9,000.00 Cash     9,80,000.00 Gain on retirement of bonds        29,000.00 Answer 4 Date Account titles Debit Credit Bonds Payable     3,00,000.00 Common stock     3,00,000.00

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