Answer:
1.
January 1, 2019,
Dr. Cash $1,000,000
Cr. Bond Payable $1,000,000
2.
July 1,
Dr. Cash $707,000
Cr. Premium on Bond $7,000
Cr. Bond Payable $700,000
3.
September 1,
Dr. Cash $194,000
Cr. Discount on Bond $6,000
Cr. Bond Payable $200,000
Explanation:
1.
As the bond is issued at the face value, $1,000,000 cash will be received, So cash account will be debited by $1,000,000 and Bond Payable account will be credited because it is a liability account.
2.
When the Bond is issued on the price more than its face value, the exptra amount from face value received is called Bond Premium.
Cash Proceed = $700,000 x 101% = $707,000
Premium = $707,000 - $700,000 = $7,000
Bond Liability = $700,000
3.
The bond is issued on discount when the bond issuance proceeds are less than the face value of the bond.
Cash Proceed = $200,000 x 97% = $194,000
Discount = $200,000 - $194,000 = $6,000
Bond Liability = $200,000
