Canadian Sea Raes Ltd ssues 8000000 of four year 4 bends dat

Canadian Sea Raes Ltd. ssues $8,000,000 of four year, 4% bends dated January 1,2017. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the SS529 price less th $50,000 fee charged by Sea\'s lawyers Sea\'s year-end is December 31 62 sale

Solution

Journal entry at issuance of bond

Cash a/c Dr $8529082

To premium a/c $529082

To bonds payable a/c $8000000

Recording of expense on issuance

Financial expenses a/c Dr $50000

To other asset a/c $50000

b) Payment of interest and related amortization

Premium on bond a/c Dr $66135

Other asset a/c Dr $6250

To interest a/c $72385

Interest a/c Dr $160000

To cash $160000

C) same entry as above