Question

Question 2

Oriole Company sold $5,800,000, 14%, 15-year bonds on January 1, 2019. The bonds were dated January 1, 2019, and paid interest on January 1. The bonds were sold at 97.

Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2019

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At December 31, 2019, $11,600 of the Discount on Bonds Payable account has been amortized. Show the balance sheet presentation of the long-term liability at December 31, 2019. (Enter account name only and do not provide descriptive information.)

Oriole Company
Balance Sheet

For the Year Quarter December 31, 2019
December 31, 2019
For the Year Ended December 31, 2019

Current Assets
Current Liabilities
Intangible Assets
Long-term Investments
Long-term Liabilities
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders’ Equity
$
    
Add    
Less    
:
$

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On January 1, 2021, when the carrying value of the bonds was $5,688,000, the company redeemed the bonds at 105. Record the redemption of the bonds assuming that interest for the period has already been paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2021

Answer 1

Journal entry

Date	account and explanation	debit	credit
jan 1,2019	Cash (5800000*97/100)	5626000
	Discount on bonds payable	174000
	Bonds payable		5800000
	(To record bond issue)

Balance sheet

Long term liabilities
Bonds payable	5800000
Less: Discount on bonds payable (174000-11600)	-162400	5637600

Journal entry

Date	account and explanation	debit	credit
jan 1,2021	Bonds payable	5800000
	Loss on redemption of bonds	402000
	Discount on bonds payable		112000
	Cash (5800000*1.05)		6090000
	(To record redemption)