Wempe Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1,

Question:

Wempe Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.

Instructions

(a) Prepare the journal entries to record the issuance of the bonds assuming they sold at:

(1) 103.

(2) 98.

(b) Prepare amortization tables for both assumed sales for the first three interest payments.

(c) Prepare the journal entries to record interest expense for 2014 under both of the bond issuances assumed in part (a).

(d) Show the long-term liabilities balance sheet presentation for both of the bond issuances assumed in part (a) at December 31, 2014.

Financial Statements
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...