Question

On January 1, 2020, Sarasota Corporation issued 12% bonds with a par value of $3,940,000, due in 10 years. The company incurred $172,000 in costs associated with the issuance of the bonds, which were capitalized. The bonds were issued at 101, and paid interest on January 1 and July 1 each year. Sarasota's year-end was March 31. The company followed ASPE and chose to use the straight-line method of amortization for bond discounts or premiums. Your answer is correct. Prepare the journal entry to record the issue of the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1 Cash 3,807,400.00 3.807.400.00 Bonds Payable eTextbook and Media

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

B 1 answer 2 In the given question part 2 is incorrect 4 So, firstly we have to calculate the amount of discount on bond 5 = Bond Payable - Net proceeds from issue of bond 16 = 3940000 - 3807400 7 = $ 132600 9 Now we have to calculate the discount amortised for 3 months 10 = discount amount /(10*12) *3 11 = 132600/(12*10)*3 12 = $ 3315 14 Thus the correct answer is Credit Debit 121515 16 Account Title and Explanation 17 Interest Expense 18 Bond Payable 19 Interest Payable ( 3940000*3%) 3315 118200 21 For any help please comment in the comment box. Sheet1 Sheet2 Sheet3 Sheet4 Sheets Shee