Question

M10-10 Computing and Reporting a Bond Liability at an Issuance Price of 102 [LO 10-3] E-Tech Initiatives Limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 102.

Answer 1

Answer:

Explanation:

Balance sheet presentation :

Long term liabilties  

Bonds payable                                                  500000

Add: Premium on bonds payable                     10000

Carrying value of bonds                                   510000