Question
Crop Corporation (with a December 31 year-end) issued $417,000, 8% bonds due in 7 years on May 1, 2020. Interest is paid semi-annually on
Crop Corporation (with a December 31 year-end) issued $417,000, 8% bonds due in 7 years on May 1, 2020. Interest is paid semi-annually on October 31 and April 30 of each year. On the issuance date, the market rate of interest was 7%, resulting in a price of $439,800 for these bonds. The premium/discount is amortized using the straight line amortization method. Do not enter dollar signs or commas in the input boxes, Round your answers to the nearest whole number. For transactions with more than one debit or credit, enter the accounts in alphabetical order a) Is this bond issued at a discount or at a premium?: Premium Prepare the journal entry on May 1, 2020, to issue the bonds. Date Account Title and Explanation Debit. 439800 Credit May 11 Cash Bonds Payable # Premium on Bonds Issued bonds b) Prepare the journal entry on October 31, 2020, to record the first interest payment and the amortization of the premium/discount. Date Account Title and Explanation Debit Credit Oct 31 Interest Expense Premium on Bonds: Cashi Paid interest on bonds c) Prepare the adjusting entry on December 31, 2020. Date Account Title and Explanation Debit Credit Dec 31 Interest Expense Premium on Bonds Interest Payable Accrued interest on bands d) Show the balance sheet presentation of Bonds Payable and related accounts as at December 31, 2020. Bonds Payable Unamortized Premium/Discount $ Book Value
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