Chula Vista Corporation sold $3,500,000, 7%, 20-year bonds on June 30, 2001. The bonds were dated June
Question:
Chula Vista Corporation sold $3,500,000, 7%, 20-year bonds on June 30, 2001.
The bonds were dated June 30, 2001, and pay interest on June 30 and December 31. The company uses straight-line amortization for premiums and discounts. Financial statements are prepared annually.
Instructions
(a) Prepare the journal entry to record the issuance of the bonds assuming they sold at:
(1) 96 1/2.
(2) 104.
(b) Prepare amortization tables for both ofthe assumed sales for the first three interest payments.
(c) Prepare the journal entries to record interest expense for the first two interest payments under both assumed sales.
(d) Show the balance sheet presentation for both assumed sales at December 31, 2001.
Step by Step Answer:
Financial Accounting Tools For Business Decision Making
ISBN: 9780471347743
2nd Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso