Somonauk Company sold $6,000,000, 9%, 20-year bonds on January 1, 2012. The bonds were dated January 1,

Question:

Somonauk Company sold $6,000,000, 9%, 20-year bonds on January 1, 2012. The bonds were dated January 1, 2012, and pay interest on January 1 and July 1. Somonauk Company uses the straight-line method to amortize bond premium or discount. The bonds were sold at 96. Assume no interest is accrued on June 30.
Instructions
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2012.
(b) Prepare a bond discount amortization schedule for the first 4 interest periods.
(c) Prepare the journal entries for interest and the amortization of the discount in 2012 and 2013.
(d) Show the presentation of the bond liability at December 31, 2013.

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...