Professor Repp,

Premium on stock acquired= $62,500

Premium on bond issued = $6,000

Stock Acquired

Company worth= $925,000

Stake acquired= $50%

Cash= $525,000

Stock payable= Stake acquired * Company worth

= 50% * $925,000

= $462,500

Stock premium= Cash - Stock payable

= $525,000 - $462,500

= $62,500

Journal Entry

DateAccounts title $ ExplanationDebitCredit

Stock payable$462,500

Stock premium$62,500

Cash$525,000

(to record stock acquisition)

Issued bond

Cash= $106,000

Bond payable= $ 100,000

Bond premium= Cash - Bond payable

= $106,000 -$100,000

= $6,000

Journal Entry

DateAccounts title $ ExplanationDebitCredit

Cash$106,000

Bond payable$100,000

Bond premium$6,000

(to record issue of bond)

All good with the homework thanks

Bryan, I am glad the homework is going great!I thank you for these great journal entries that explain the recording of the bond process.If a novice was looking at your post how would you explain these entries to them? Great job.Professor Repp