Cullumber Company issued $650,000of 5-year,9% bonds at96on January 1, 2020. The bonds pay interest annually.

Prepare the journal entry to record the issuance of the bonds

Compute the total cost of borrowing for these bonds.

Prepare the journal entry to record the issuance of the bonds, assuming the bonds were issued at102

Compute the total cost of borrowing for these bonds, assuming the bonds were issued at102.

Problem 2

On May 1, 2020, Sheridan Corp. issued $680,000,9%, 5-year bonds at face value. The bonds were dated May 1, 2020, and pay interest annually on May 1. Financial statements are prepared annually on December 31.

Prepare the journal entry to record the issuance of the bonds.

Prepare the adjusting entry to record the accrual of interest on December 31, 2020.

Show the balance sheet presentation on December 31, 2020.

Prepare the journal entry to record payment of interest on May 1, 2021

Prepare the adjusting entry to record the accrual of interest on December 31, 2021.

Assume that on January 1, 2022, Sheridan pays the accrual bond interest and calls the bonds. The call price is 104. Record the payment of interest and redemption of the bonds.