First problem

P 22-9B

BONDS ISSUED AT A PREMIUMWang Corporation issued the following bonds at a premium:

Date of issue and sale: March 1, 20-1

Principal amount: $250,000

Sale price of bonds: 103

Denomination of bonds: $500

Life of bonds: 20 years

Stated rate: 8%, payable semiannually on August 31 and February 28

REQUIRED:I need to prepare the journal entries?

1. Prepare journal entries for:

(a)Issuance of the bonds at a premium.

(b)Interest payment and premium amortization on the bonds on August 31, 20-1.

(c)Year-end adjustment on the bonds for 20-1.

(d)Reversing entry for the beginning of 20-2.

(e)Interest payments and premium amortization on the bonds for 20-2 (February 28 and August 31).

2. Calculate the carrying value of the bonds on August 31, 20-2.

Answer: 2.Carrying value, Aug. 31, Year 2: $256,937.50

Help: Show Calculation?

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Second problem

P 22-10B

BONDS ISSUED AT A DISCOUNTBrandon, Inc., issued the following bonds at a discount:

Date of issue and sale: April 1, 20-1

Principal amount: $600,000

Sale price of bonds: 96

Denomination of bonds: $1,000

Life of bonds: 10 years

Stated rate: 7%, payable semiannually on September 30 and March 31

REQUIRED:I need to prepare the journal entries?

1. Prepare journal entries for:

(a)Issuance of the bonds at a discount.

(b)Interest payment and discount amortization on the bonds on September 30, 20-1.

(c)Year-end adjustment on the bonds for 20-1.

(d)Reversing entry for the beginning of 20-2.

(e)Interest payments and discount amortization on the bonds for 20-2 (March 31 and September 30).

2. Calculate the carrying value of the bonds on September 30, 20-2.

Answer: 2. Carrying value, Sept. 30, Year 2: $579,600

Help: Show Calculation?

3. Prepare the bonds payable section of a partial balance sheet as of September 30, 20-2.