Homework Answers
a) Journal entry
| Date | account and explanation | Debit | Credit |
| Jan 1 | Cash (3250000*1.03) | 3347500 | |
| Bonds payable | 3250000 | ||
| Premium on bonds payable | 97500 |
b) Amortization table
| Annual interest period | Interest to be paid | Interest expense to be recorded | Premium amortization | Unamortized premium | Carrying value |
| Issue date | 97500 | 3347500 | |||
| 1 | 3250000*12% = 390000 | 380250 | 97500/10 = 9750 | 87750 | 3337750 |
| 2 | 390000 | 380250 | 9750 | 78000 | 3328000 |
| 3 | 390000 | 380250 | 9750 | 68250 | 3318250 |
| 4 | 390000 | 380250 | 9750 | 58500 | 3308500 |
Journal entry
| Date | account and explanation | Debit | Credit |
| Dec 31 | Interest expense | 380250 | |
| Premium on bonds payable | 9750 | ||
| Interest payable | 390000 | ||
| Dec 31 | Interest expense | 380250 | |
| Premium on bonds payable | 9750 | ||
| Interest payable | 390000 |
Balance sheet
as on December 31,2021
| Current liabilities | ||
| Interest payable | 390000 | |
| Long term liabilities | ||
| Bonds payable | 3250000 | |
| Add: | ||
| Premium on bonds payable | 78000 | 3328000 |
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Oriole Electric...
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