Answer:
A. Jan. 1, 2019
Dr Cash 5,880,000
Cr Discount on bonds payable 120,000
Cr Bonds payable 6,000,000
B. $5,888,000
C. Jan. 1, 2019
Dr Bonds Payable 6,000,000
Dr Loss on Redemption 224,000
Cr Discount on Bonds Payable 104,000
Cr Cash 6,120,000
Explanation:
A.Preparation of the journal entry to record the issuance of the bonds on January 1, 2019
Jan. 1, 2019
Dr Cash 5,880,000
(98%*6,000,000)
Cr Discount on bonds payable 120,000
(2%*6,000,000)
Cr Bonds payable 6,000,000
(To record issue bonds payable)
B. Preparation of the balance sheet presentation of the long-term liability
Balance Sheet December 31, 2019
Long-term liabilities
Bonds payable 6,000,000
Less: Discount on bonds payable 112,000
(120,000-8,000)
Long-term liabilities $5,888,000
C. Preparation of the Journal entry to record the redemption of the bonds
Jan. 1, 2019
Dr Bonds Payable 6,000,000
Dr Loss on Redemption 224,000
(6,120,000-5,896,000)
Cr Discount on Bonds Payable 104,000
(6,000,000-5,896,000)
Cr Cash 6,120,000
(6,000,000*102%)
(To record redemption of bonds)
