Chapter 22 Accounting 2

P22-9a

Bonds Issued At A Premium Bunkichi Corporation issued the following bonds at a premium:

Date of issue and sale March 1, 20

Principal amount $800,000

Sale price of bonds 103

Denomination of bonds $1,000

Life of bonds 10 years

Stated rate 8% payable semiannually on August 31 and February 28

1. Prepare journal entries for:

a. Issuance of bonds at a premium

b. Interest payment and premium amortization on the bonds on August 31, 20.

c. Year end adjustment on the bonds for20-1.

d. Reversing entry for the beginning of 20-2.

e. Interest payments and premium amortization on the bonds for 20-2

2. Calculate the carrying value of the bonds on August 31, 20-2

P22-10A

Bonds Issued At A Discount Emerald, Inc., issued the following bonds at a discount;

Date of issue and sale April 1, 20-1

Principal amount: $500.000

Sales price of bonds: 97

Denomination of bonds: $1,000

Life of bonds 20 years

State rate: 8% payable semiannualy on September 30 and March 31

1. Prepare journal entries for:

a. Issuance of the bonds at a discount.

b. Interest payment and discount amortization on the bonds on September 30,20-1.

c. Year end adjustment on the bonds for 20-1.

d. Reversing entry for the beginning of 20-2.

e. Interest payments and discount amortization on the bonds for 20-2 (March 31 and September 30).

2. Calculate the carrying value of the bonds on September 30, 20-2.