Question

.

Present entries to record the selected transactions described below.

a. Issued $2,750,000 of 10-year, 8% bonds at 97.

If an amount box does not require an entry, leave it blank.

b. Amortized bond discount for a full year, using the straight-line method.

c. At the end of the third year, called bonds at 98. The bonds were carried at $2,692,250 at the time of the redemption.

If an amount box does not require an entry, leave it blank.

Answer 1

Journal entries
Date	Account Titles and Explanation	Debit	Credit	Calculation
a	Cash	2,667,500		=2,750,000 *97%
	Discount on Bonds Payable	82,500
	Bonds Payable		2,750,000
b	Interest expense	8,250
	Discount on Bonds Payable		8,250	=82,500/10 years
c	Bonds Payable	2,750,000
	Loss on redemption of bonds	2,750
	Discount on Bonds Payable		57,750	=2,750,000-2,692,250
	Cash		2,695,000	=2,750,000 *98%