Instr uctor :
8%
25
-year bonds on January 1, 2012. The
bonds were dated January 1, 2012, and pay interest on January 1. Champeau Company uses the straight-line method to
amortize bond premium or discount.
Name:
Paola Orpella Montané
Date:
Financial Ac counting, Sixth Edition by Kimmel, Weygandt, an d Kieso
P10-8B, Prepare jou rnal entries to record issu ance of bonds, interest, and strai ght-line amortization, and balance
sheet presentation .
Instru ctions:
for 2012, assuming that the bonds sold at
102
Course:
A6
Primer on Using Excel in Accounting by Rex A Schildho use
Champeau Company sold
$2.500.000
ene 1
Cash (2.500. 000 x 102%)
2.550.000
(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense
Bonds Payable
dic 31
Bond Interest Expense
198.000
2.500.000
(b) Prepare journal entries as in part (a) assuming that the bonds sold at
96
2.500.000
Premium on Bonds Payable
50.000
Premium on Bonds Payable (50,000 / 25)
2.000
Interest Paayble ( 2.500. 000 x 8%)
200.000
ene 1
Cash (2.500. 000 x 96%)
2.400.000
Discount on bonds payable
100.000
Bonds payable
dic 31
Bond Interest Expense
204.000
Interest Payable (2.500.000 x 8%)
200.000
Discount on Bodnds payable ( 100.000/25)
4.000
(c) Show the balance sheet presentation for the bond issue at December 31, 2012, using
(1) the 102 selling price
Current Liabilities
Interest payable
$200.000
Long-term Liabilities
Bonds payable
$2.500.000
Add: Premiu on bods payable
2.000
$2.502.000
$2.496.000
(2) the 96 selling price.
Current Liabilities
Interest Payable
$200.000
Long-term Liabilities
Bonds payable
$2.500.000
Less: discount on bonds
4.000
