Question

Harvard Inc. issues $4.0 million, 5-year, 8% bonds at 102, with interest payable on January 1. The straight-line method is used to amortize bond premium.

Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1

Prepare the journal entry to record interest expense and bond premium amortization on December 31, 2022, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

Answer 1

Journal Entries Date Account Title and Explaination Post. Ref. Debit Sin Millions Credit Sin Millions Jan.1 4.08 Cash ($4 Millions x 102% Bonds Payable Premium on Bonds Payable (To record issue of Bonds at 102) 4.00 0.08 0.30 0.02 Dec.31 Interest Expense Premium on Bonds Payable ($0.08 Millions/5yrs) Interest Payable ($4millionsx8%) (To record Interest Expense for the year) 0.32