Question

CALCULATOR FULL SCREEN PRINTER VERSION E NEE Question 4 Sheridan Company has issued three different bonds during 2020. Interest is payable annually on each of these bonds 1. On January 1, 2020, 1,200,7%, 5-year, $1,000 bhds dated January 1, 2020, were issued at face value 2. On July 1, $885,000, 89, 5-year bonds dated July 1, 2020, were issued at 102. 3. On September 1, $375,000, 6%, 5-year bonds dated September 1, 2020, were issued at 97. Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automa indent manually. Record journal entries in the order presented in the problem.) ated when amount is entered. Do not Date Account Titles and Explanation Debit Credit 06:30

Answer 1

Date	Account Titles and Explanation	Debit	Credit
January 1	Cash	$1,200,000
	Bonds payable		$1,200,000
	( To record issuance of bonds)
July 1	Cash	$902,700
	Premium on bonds payable		$17,700
	Bonds payable		$885,000
	( To record issuance of bonds on premium)
September 1	Cash	$363,750
	Discount on bonds payable	$11,250
	Bonds payable		$375,000
	( To record issuance of bonds on discount)

1.

Cash proceeds from issue of bonds = Number of bonds x Par value one bond

= 1,200 x 1,000

= $1,200,000

2.

Par value of bonds = 885,000

Issue price = 102

Cash proceeds from issue of bonds = 885,000 x 102%

= $902,700

Premium on bonds payable = Cash proceeds from issue of bonds - Par value of bonds

= 902,700-885,000

= $17,700

3.

Par value of bonds = 375,000

Issue price = 97

Cash proceeds from issue of bonds = 375,000 x 97%

= $363,750

Discount on bonds payable = Par value of bonds - Cash proceeds from issue of bonds

= 375,000-363,750

= $11,250

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks