Question

Current Attempt in Progress Sheffield Corporation sold $2,900,000, 8%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Sheffield Corporation uses the straight-line method to amortize bond premium or discount. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 106. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 1 Dec. 31

Answer 1

Bond Premium

Credit Sheffield Corporation Journal entries Date Account Titles and Explanation Debit 1-Jan-22 Cash 3,074,000 Premium on Bonds Payable Bonds Payable Calculation 2900000*106% 174,000 2,900,000 31-Dec-22 Interest expense Premium on Bonds Payable Interest Payable 197,200 34,800 174000/5 years 232,000 2900000*8% Sheffield Corporation Balance Sheet (Partial) As of December 31, 2022 Current Liabilities Interest Payable Non-Current Liabilities Bonds Payable Premium on Bonds Payable 232,000 2,900,000 139,200 3,039,200 174000-34800 Add

Bond Discount

Credit Sheffield Corporation Journal entries Date Account Titles and Explanation Debit 1-Jan-22 Cash 2,871,000 Discount on Bonds Payable 29,000 Bonds Payable Calculation 2900000*99% 2,900,000 237,800 31-Dec-22 Interest expense Discount on Bonds Payable Interest Payable 5,800 29000/5 years 232,000 2900000*8% Sheffield Corporation Balance Sheet (Partial) As of December 31, 2022 Current Liabilities Interest Payable Non-Current Liabilities Bonds Payable Discount on Bonds Payable 232,000 2,900,000 (23,200) 2,876,800 29000-5800 Less