Question 1 Sunland Company sold 3280000 10 10year bonds on J

Question 1 Sunland Company sold $3,280,000, 10%, 10-year bonds on January 1, 2017, The bonds were dated January 1, 2017, and pay interest on January 1, The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 101 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit

Solution

No. Date Account Titles and Explanation Debit Credit 1. 1/1/17 Cash ($3,280,000 x 101%) $3,312,800 To Bond Payable $3,280,000 To Premium on issue of bonds $32,800 2. 1/1/17 Cash ($3,280,000 x 96%) $3,148,800 Discount on Bonds payable $131,200 Bonds payable $3,280,000