3 years ago

Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method

1 answer:

7 0

Answer:

Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010.

The journal entry is as follows:

On April 1,

Cash A/c Dr. $20,811,010

To Bonds payable A/c $20,000,000

To Premium on bonds payable $811,010

(To record the issuance of bonds)

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