Smudge Company sold $1,500,000, 10%, 10-year bonds on January 1, 2007.

The bonds were dated January 1, 2007, and pay interest on January 1. Smudge Company uses the straight-line method to amortize bond premium or discount.

524 Prepare journal entries to record issuance of bonds, interest, and straight-line amortization, and balance sheet presentation.

(SO'5,-7,,8)

(c) (2) 12/31/07 Interest Expense $238,000 Prepare journal entries to record issuance of bonds, payment of interest, and amortization of bond premium using effectiveinterest method.

(SO 5, 9)

(c) Interest Expense $157,205 Prepare journal entries to record issuance of bonds, payment of interest, and effective-interest amortization, and balance sheet presentation.

SO) ss), 74004)

(c) (1) $229,003 CHAPTER 10 Reporting and Analyzing Liabilities Instructions

(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2007, 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 balance sheet presentation for the bond issue at December 31, 2007, using

(1) the 102 selling price, and then (2) the 96 selling price.