Answer:
Date, bonds sold at a premium
Dr Cash 5,500,000
Cr Bonds payable 5,000,000
Cr Premium on bonds payable 500,000
Explanation:
The total face value of the bonds is $1,000 x 5,000 bonds = $5,000,000
since the bonds were sold at 110, their price was $5,000,000 x 110% = $5,500,000
the difference between the face value and the actual market price = $5,500,000 - $5,000,000 = $500,000 must be recorded as premium on bonds payable (increases the bonds' carrying value)
