PR 22.11A: Bonds Issued at a Premium, Redeemed at a Loss

Bonds Issued at a Premium, Redeemed at a Loss Plantation Company issued the following bonds at a premium: a Date of issue and sale: March 1, 20-1 Principal amount: $660,000 Sale price of bonds: 104 Denomination of bonds: $1,000 Life of bonds: 10 years Stated rate: 9%, payable semiannually on August 31 and February 28 Required: Prepare journal entries for the transactions below. If an amount box does not require an entry, leave it blank. a. Issuance of the bonds. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-1 Mar. 1 Cash 660,000 X 1 2 Premium on Bonds Payable 2 Bonds Payable 3 3 Feedback Check My Work Partially correct b. Interest payment and premium amortization on the bonds on August 31, 20-1. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-1 Aug. 31 Bond Interest Expense 1 2 Premium on Bonds Payable 2 Cash 3 3 Feedback Check My Work Partially correct C. Year-end adjustment on the bonds for 20-1. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-1 Dec. 31 Bond Interest Expense 1 2 Premium on Bonds Payable 01C 2 3 Bond Interest Payable 3 Feedback Check My Work Partially correct d. Reversing entry for the beginning of 20-2. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-2 Jan. 1 Bond Interest Payable 1 2 Bond Interest Expense 2 3 Premium on Bonds Payable 3 Feedback Check My Work Partially correct e. Redemption of $50,000 of the bonds on March 1, 20-6, at 107. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-6 Mar. 1 Bonds Payable 2 Premium on Bonds Payable 2 3 Loss on Bonds Redeemed 1101 3 Cash 4 4 Feedback Check My Work Partially correct