Question

Bramble Corp. has issued three different bonds during 2019. Interest is payable annually on each of these bonds.

1.		On January 1, 2019, 1,400, 7%, 5-year, $1,000 bonds dated January 1, 2019, were issued at face value.
2.		On July 1, $794,000, 8%, 5-year bonds dated July 1, 2019, were issued at 101.
3.		On September 1, $360,000, 6%, 5-year bonds dated September 1, 2019, were issued at 97.

Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Jan. 1
2.	July 1
3.	Sept. 1

Answer 1

Journal Entries:

No.	Date	Account Titles and Explanation	Debit	Credit
1)	Jan. 1, 209	Cash	$1,400,000
		Bonds Payable (1,400 * $1,000)		$1,400,000
		(To record the issue of 7% of bonds at fair value)
2)	Jul. 1, 2019	Cash ($794,000*101/100)	$801,940
		Bonds Payable		$794,000
		Premium on Bonds Payable ($801,940 - $794,000)		$7,940
		(To record the issue of 8% bonds with premium)
3)	Sep. 1, 2019	Cash ($360,000*97/100)	$349,200
		Discount on Bonds Payable ($360,000 - $349,200)	$10,800
		Bonds Payable		$360,000
		(To record the issue of 6% bonds at discount)