Question

On January 1, 2017, Ultra Vision Corp. issued $1,290,000 of 20-year 8.0% bonds that pay interest semiannually on June 30 and December 31. Assume the bonds were sold at (1) 98; and (2) 102. Journalize the issuance of the bonds at 98 and 102. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

• 1
  Record the sold bonds at a discount.
• 2
  Record the sold bonds at a premium.

Answer 1

Journal Entries
1)	Bonds sold at discount
	Accounting titles & discount				Debit	Credit
	Cash	(1,290,000*.98)			1264200
	Discount on bonds payable				25800
	Bonds payable					1,290,000
2)	Bonds sold at premium
	Accounting titles & discount				Debit	Credit
	Cash	(1,290,000*1.02)			1315800
	Premium on bonds payable					25800
	Bonds payable					1,290,000