Question

Sunland Company issues $1.90 million, 10-year, 8% bonds at 98, with interest payable each January 1. Your answer is correct. Prepare the journal entry to record the sale of these bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Your answer is partially correct. Try again. Assuming instead that the above bonds sold for 102, prepare the journal entry to record the sale of these bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT

Answer 1

Answer:

1. Jan 1

Dr Cash $1,862,000

Dr Discount on bonds $38,000

Cr Bonds payable $1,900,000

2.

Dr cash $1,938,000

Cr bonds payable $1,900,000

Cr Premium bonds $38,000

Explanation:

Sunland Company

1. Jan 1

Dr cash

Dr Cash $1,862,000

Dr Discount on bonds $38,000

Cr Bonds payable $1,900,000

Cash ($1,900,000 x 0.98) = $1,862,000

2.Assuming instead that the above bonds sold for 102

Dr cash $1,938,000

Cr bonds payable $1,900,000

Cr Premium bonds $38,000

Cash ($1,900,000 x 1.02) = $1,938,000