Question

1)Monty Corp. issues $350,000 of bonds for $367,500

1A) prepare the journal entry to record the issuance of the bonds

1B) Show how the bonds would be reported on the balance sheet (partial) at the date issuance  

Answer 1

Answer 1A):

Journal Entry to Record Issuance of Bonds

Account Title and Explanation	Debit	Credit
Cash	$367,500
Bonds Payable		$350,000
Premium on Bonds Payable		$17,500
(To record Issuance of Bonds)

Premium on Bonds = Issued Price - Face Value

= $367,500 - $350,000

=$17,500

Answer 1B)

Balance sheet (partial)

Monty Corp.
Balance Sheet (Partial)
Long Term Liabilities
Bonds Payable	$ 350,000.00
Add: Premium on Bonds Payable	$    17,500.00
	$ 367,500.00