Prepare entries for bondsBE15-5 Frankum Company has issued three different bonds

Question

Prepare entries for bondsBE15-5 Frankum Company has issued three different bonds during 2017. Interest is pay- issued. able annually on each of these bonds. I. On January 1, 2017, 1,000,8%, 5-year, $1,000 bonds dated January 1, 2017, were issued LO 2) at face value. 2. On July 1 , $900,000, 9%, 5-year bonds dated July 1 , 2017, were issued at 102. 3. On September 1, $400,000, 7%, 5-year bonds dated September 1, 2017, were issued at 98. Prepare the journal entry to record each bond transaction at the date of issuance

Explanation / Answer

Date General Journal Debit Credit Jan. 1 Cash(1,000 * $1,000) $1,000,000 Bonds Payable $1,000,000 July 1 Cash($900,000 * 1.02) $918,000 Bonds Payable $900,000 Premium on Bonds Payable $18,000 Sept. 1 Cash($400,000 * 0.98) $392,000 Discount on Bonds Payable $8,000 Bonds Payable $400,000

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