Question

Sheridan Company issued $501,000, 8%, 30-year bonds on January 1, 2022, at 102. Interest is payable...

Sheridan Company issued $501,000, 8%, 30-year bonds on January 1, 2022, at 102. Interest is payable annually on January 1. Sheridan uses straight-line amortization for bond premium or discount.

Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(a) The issuance of the bonds.
(b) The accrual of interest and the premium amortization on December 31, 2022.
(c) The payment of interest on January 1, 2023.
(d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Homework Answers

Answer #1
Answer

Journal entry

No Date account title and explanation Debit Credit
a Jan-01 Cash $     511,020
Bonds payable $     501,000
Premium on bonds payable $       10,020
b Dec-31 Interest expense $       39,746
Premium on bonds payable (10020/30) $            334
Interest payable (501000*8%) $       40,080
c Jan-01 Interest payable $       40,080
Cash $       40,080
d Dec-31 Bonds payable $     501,000
Cash $     501,000
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