Question

Brief Exercise 9-45 (Algorithmic) Issuance of Long-Term Debt Natalie Corp. provides medical supplies to hospitals located in Western Washington and Oregon. This year, Natalie Corp. issued 8,900 bonds with a $1,000 face value. The nominal rate for each bond is 7%. Required: Prepare the necessary journal entries to record the issuance of these bonds assuming the bonds were issued (a) at par, (b) at 103, and (c) at 96. a. Cash 8,900,000 Bonds Payable 8,900,000 b. Cash Premium on Bonds Payable Bonds Payable

Answer 1

Solution

Transaction	General Journal	Debit	Credit
a	Cash	$        8,900,000
	Bonds payable		$            8,900,000
	(To record issuance of bonds)
b	Cash	$        9,167,000*
	Premium on bonds payable		$               267,000
	Bonds payable		$            8,900,000
	(To record issuance of bonds)
c	Cash	$        8,544,000**
	Discount on bonds payable	$           356,000
	Bonds payable		$            8,900,000
	(To record issuance of bonds)

*8900000/100 x 103

**8900000/100 x 96