RassignmentstakeAssign Bond Premium Entries for Bonds Payabl

R-assignments&takeAssign; Bond Premium, Entries for Bonds Payable Transactions Campbel Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell ssued $76,100,000f 10 equipment. On July 1, Year 1, Campbell issued $76,100,000 of 10- year, 10% bonds at a market (effective) inte bonds is payable semiannually on December 31 year. Required: rest rate of 9%, receiving cash of $81,049,316. Interest on the and June 30. The fiscal year of the company is the calendar If an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bands on July 1, Year 1. Cash Premium on Bonds Payable i 81049,316 76.100.000 Bonds Payable y Bonds Payable is a\'ways recorded at face value, Any differance in issue price is renected in a The straight-tine method of amortization provides equal amounts of amortization over the lte of the bond premium or discount account,

Solution

Solution 1:

Solution 2 a & b:

Solution 3:

Total Interest Expense for year 1 = Interest expense on Dec 31, year 1 + Interest expense on June 30, year 2

= $3557534 + $3557534 = $7,115,068

Solution 4:

Yes, the bonds proceeds will always be greater than the face amount of bond when contrat rate is higher than the market rate of interest.

Solution 5:

Journal Entries - Campbell Inc.
Date	Particulars	Debit	Credit
July 1, Year 1	Cash Dr	$81,049,316.00
	To Premium on Bonds Payable		$4,949,316.00
	To Bonds Payable		$76,100,000.00
	(being bond issued at premium)