Question

Swanson Corporation issued $8,100,000 of 20-year, 8 percent bonds on April 1, 2013, at 102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2033. Swanson's financial year ends on December 31. Prepare the following journal entries:

a.	Prepare the journal entry at April 1, 2013, to record the issuance of the bonds. (Omit the "$" sign in your response.)

Date	General Journal	Debit	Credit
Apr. 1, 2013	(Click to select)Accounts receivableCashPremium on bonds payableBond payableSalesBond interest expenseBond interest payableAccounts payable
	(Click to select)Bond interest expenseBond interest payablePremium on bonds payable SalesCashAccounts receivableBond payable Accounts payable
	(Click to select)Bond interest payableCashAccounts receivableAccounts payablePremium on bonds payable Bond payable Bond interest expenseSales

b.	Prepare the journal entry at September 30, 2013, to pay interest and to amortize the bond premium. (Omit the "$" sign in your response.)

Date	General Journal	Debit	Credit
Sept. 30, 2013	(Click to select)Bond interest payablePremium on bonds payable SalesAccounts receivableCashAccounts payableBond interest expenseBond payable
	(Click to select)Premium on bonds payable Accounts receivableBond interest expenseSalesBond payable Accounts payableBond interest payableCash
	(Click to select)Premium on bonds payableAccounts payableSalesBond interest expenseCashBond interest payableAccounts receivableBond Payable

c.	Prepare the journal entry at March 31, 2033, to pay interest, amortize the bond premium, and retire the bonds at maturity (make two separate entries). (Omit the "$" sign in your response.)

Date	General Journal	Debit	Credit
Mar. 31, 2033	(Click to select)Bond interest payableBond payableBond interest expenseAccounts receivableSalesAccounts payableCashPremium on bonds payable
	(Click to select)CashPremium on bonds payable Accounts payableBond interest payableBond payableBond interest expenseSalesAccounts receivable
	(Click to select)Bond interest expenseCashAccounts receivablePremium on bonds payable Accounts payableBond payableSalesBond interest payable
	(Click to select)Accounts receivableAccounts payableSalesBond interest payablePremium on bonds payableBond interest expenseCashBond payable
Mar. 31, 2033	(Click to select)Bonds payableBond interest expenseSalesBond interest payablePremium on bonds payableAccounts payableAccounts receivableCash
	(Click to select)CashBond interest payableBond interest expenseBonds PayablePremium on bonds payableSalesAccounts receivableAccounts payable

Answer 1

Date	General Journal	Debit	Credit
Apr. 1, 2013	Cash	8262000		=8100000*1.02
	Bond payable		8100000
	Premium on bonds payable		162000
b
Sept. 30, 2013	Bond interest expense	319950
	Premium on bonds payable	4050		=162000/20*6/12
	Cash		324000	=8100000*8%*6/12
c
Mar. 31, 2033	Bond interest expense	159975
	Bond interest payable	162000		=8100000*8%*3/12
	Premium on bonds payable	2025		=162000/20*3/12
	Cash		324000	=8100000*8%*6/12
Mar. 31, 2033	Bonds payable	8100000
	Cash		8100000