E10-23 (Algo) (Chapter Supplement) Recording and Reporting a Bond Issued at a Premium (Straight-Line Amortization without a Premium Account) LO 10-5

On January 1 of this year, Victor Corporation sold bonds with a face value of $1,420,000 and a coupon rate of 8 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. Victor uses the straight-line amortization method and does not use a premium account. Assume an annual market rate of interest of 6 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answers to whole dollars.)

Required:

1.& 2. Prepare the journal entry to record the issuance of the bonds and the interest payment on June 30 of this year.

3. What bonds payable amount will Victor report on its June 30 balance sheet?

Complete this question by entering your answers in the tabs below.

• Req 1 and 2
• Req 3

Prepare the journal entry to record the issuance of the bonds and the interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

No	Date	General Journal	Debit	Credit
1	January 01	Cashselected answer= correct	1,514,065 incorrect
		Premium on bonds payable = incorrect		94,065= incorrect
		Bonds payable = incorrect		1,420,000= incorrect
2	June 30	Interest expense=correct	45,042selected answer incorrect
		Premium on bonds payable= incorrect	11,758=incorrect
		Cash = correct		56,800=correct

What bonds payable amount will Victor report on its June 30 balance sheet?

VICTOR CORPORATION
Balance Sheet (Partial)
At June 30
Long-term liabilities
Bonds payable = correct	$1,420,000= incorrect
Premium on bonds payable= incorrect	$82,307= incorrect
		$1,502,307