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On March 1, 2014, Peeks Corporation issued a $10 million face-value bond with 10% face interest...

On March 1, 2014, Peeks Corporation issued a $10 million face-value bond with 10% face interest rate and a maturity of fifteen years. The semiannual interest payments are made on March 1 and September 1. The bond was issued at a premium for $10,980,500.

Prepare the journal entry for the debtor to record the sale of the bond
on March 1, 2014.
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Answer #1
Date General Journal Debit Credit
March 1, 2014 Cash $10,980,500
Premium on bonds payable $980,500
Bonds payable $10,000,000
( To record issuance of bonds on premium)

Par value of bonds = $10,000,000

Issue price = $10,980,500

Premium on bonds payable = Issue price- Par value of bonds

= 10,980,500-10,000,000

= $980,500

Kindly comment if you need further assistance. Thanks‼!            

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