Saberhagen Company sold $3,500,000, 8%, 10-year bonds on July 1, 2014. The bonds were dated July 1,

Question:

Saberhagen Company sold $3,500,000, 8%, 10-year bonds on July 1, 2014. The bonds were dated July 1, 2014, and pay interest July 1 and January 1. Saberhagen Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.

Instructions

(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2014, assuming that the bonds sold at 104.

(b) Prepare journal entries as in part (a) assuming that the bonds sold at 98.

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...