Question 1 On January 1 2017 Sunland Company issued 4200000

Question 1

On January 1, 2017, Sunland Company issued $4200000, 10-year, 4% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2017 is

Question 2

Vaughn Manufacturing issues 2200, 10-year, 8%, $1000 bonds dated January 1, 2017, at 98. The journal entry to record the issuance will show a

debit to Cash of $2200000.

Question 3

A $510000 bond was retired at 98 when the carrying value of the bond was $500000. The entry to record the retirement would include a

Solution

Solution:

1. b.

Cash 4284000
    Bonds Payable 4200000
    Premium on Bonds Payable 84000

2. a.

Working:

cash. Dr $2,156,000

Discount on bonds payable Dr $44,000

To bonds payable $2,200,000

3.b gain on bond redemption of $10,000