Question

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bonds and bond interest expense for 2015, assuming that the bonds are sold at 102. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) no interest is Saberhagen Company sold $2,580,000, 8%, 10-year bonds on July 1, 2015. The bonds were dated July 1, 2015, and pay interest July 1 and January 1. Saberhagen Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30 accrued on Prepare all the necessary journal entries to record the i issuance of the Date Account Titles and Explanation July 1, 2015 Debit Credit Dec. 31, 2015 Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2015, assuming that the bonds are sold at 95. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1, 2015 Dec. 31, 2015 Show balance sheet presentation for the bonds at December 31, 2015. (For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2024.) Saberhagen Company Balance Sheet December 31, 2015 Premium

Answer 1

Date	Account titles & Explanations				Debit	Credit
1/1/2017	Cash	(2,580,000*1.02)			2631600
	premium on bonds payable					51,600
	bonds payable					2,580,000
12/31/2015	interest expense				100620
	premium on bonds payable(51600/20)				2580
	interest payable		(2580000*4%)			103200
Date	Account titles & Explanations				Debit	Credit
1/1/2017	Cash	(2,580,000*.95)			2451000
	Discount on bonds payable				129,000
	bonds payable					2,580,000
12/31/2015	interest expense				109650
	discount on bonds payable(129000/20)					6450
	interest payable		(2580000*4%)			103200
	Balance sheet
premium
current liabilities
interest payable					103,200
long term liabilities
bonds payable				2,580,000
Add:
premium on bonds payble				49020	2,629,020
	Balance sheet
premium
current liabilities
interest payable					103,200
long term liabilities
bonds payable				2,580,000
less:
Discount on bonds payable				122,550	2,457,450