Question

Concord Corporation sold $2,950,000, 9%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Concord Corporation uses the straight-line method to amortize bond premium or discount. - Your answer is partially correct. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 103. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Cash 3,038,500 Premium on Bonds Payable 2 2,950,000 Premium on Bonds Payable Bonds Payable Interest Expense C C O C 247800L ,950,000 88500 Bonds Payable 88500 Dec. 31 Premium on Bonds Payable 17700 Interest Payable 265500

Answer 1

Solution 1:

Journal Entries (issued at 103)
Date	Particulars	Debit	Credit
01-Jan-22	Cash A/c Dr ($2950000*103%)	$30,38,500
	To bonds payable		$29,50,000
	To Premium on bonds Payable		$88,500
	(Being bond issued at premium)
31-Dec-22	Interest Expense Dr	$2,47,800
	Premium on bond Dr ($88500*1/5)	$17,700
	To Interest payable ($2,950,000*9%)		$2,65,500
	(To record Interest accrued and Amortization of Premium on issue)

SOlution 2:

Concord corporation
Journal Entries (issued at 96)
Date	Particulars	Debit	Credit
01-Jan-22	Cash A/c Dr ($2950000*96%)	$28,32,000
	Discount on Bonds Payable	$1,18,000
	To bonds payable		$29,50,000
	(Being bond issued at Discount
31-Dec-22	Interest Expense Dr	$2,89,100
	To Discount on bond Dr ($118000*1/5)		$23,600
	To Interest payable ($2,950,000*9%)		$2,65,500
	(To record Interest accrued and Amorization of Discount on issue)

Solution 3:

Concord Corporation
Balance Sheet (Partial)
At December 31, 2022
Current Liabilities:
Interest payable		$2,65,500
Long Term Liabilities:
Bond Payable	$29,50,000
Add: Unamortized Premium (88500*4/5)	$70,800	$30,20,800

Solution 4:

Balance Sheet (Partial)
At December 31, 2022
Current Liabilities:
Interest payable		$2,65,500
Long Term Liabilities:
Bond Payable	$29,50,000
Less: Unamortized Discount (118000*4/5)	$94,400	$28,55,600