Please help and show work if possible :) Kershaw Electric sold $5,430,000, 12%,
ID: 2425748 • Letter: P
Question
Please help and show work if possible :)
Kershaw Electric sold $5,430,000, 12%, 10-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and paid interest on January 1. The bonds were sold at 96.
Prepare the journal entry to record the issuance of the bonds on January 1, 2017.
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2017.
(b) At December 31, 2017, $8,000 of the bond discount had been amortized. Show the long-term liability balance sheet presentation of the bond liability at December 31, 2017.
(c) At January 1, 2017, when the carrying value of the bonds was $5,896,000, the company redeemed the bonds at 102. Record the redemption of the bonds assuming that interest for the year had already been paid.
Explanation / Answer
a Journal entry on issue Date Account title and equation Debit($) Credit($) 01-01-2017 Cash 52,12,800.00 Discount on issue 2,17,200.00 Bonds payable 5430000 (To record the issue of bonds) b Balance as on 01.01.2017 52,12,800 Add: Interest@12% on face value 6,51,600 Total balance 58,64,400 Less Discount 8,000 Balance as on 31.12.2017 58,56,400 c Bonds payable 5896000 Bank 55,38,600.00 Discount on issue 2,09,200.00 Premium on redemption 1,48,200.00 (To record the redemption ;discount is adjusted against premium)