Champeau Company sold $2,500,000, 8%, 25-year bonds on January 1, 2012. The bonds were dated January 1,

Question:

Champeau Company sold $2,500,000, 8%, 25-year bonds on January 1, 2012. The bonds were dated January 1, 2012, and pay interest on January 1. Champeau Company uses the straight-line method to amortize bond premium or discount.

Instructions
(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2012, assuming that the bonds sold at 102.
(b) Prepare journal entries as in part (a) assuming that the bonds sold at 96.
(c) Show the presentation for the bond issue at December 31, 2012, using (1) the 102 selling price, and then (2) the 96 selling price.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...