Question

On January 1 of this year, Victor Corporation sold bonds with a face value of $1,450,000 and a coupon rate of/ percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. Victor uses the straight-line amortization method and also uses a premium account. Assume an annual market rate of interest of 6 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Required: 1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit No 1 Date January 01 Answer is complete and correct. General Journal Debit Cash 1,500,89 Bonds payable Premium on bonds payable 1,450,00 50,893 2. Prepare the journal entry to record the interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit No 1 Date June 30 Answer is complete and correct. General Journal Debit Interest expense 44,388 Premium on bonds payable 6,3621 Cash 50,750 3. What bonds payable amount will Victor report on its June 30 balance sheet? X Answer is complete but not entirely correct. VICTOR CORPORATION Balance Sheet (Partial) At June 30 Long-term liabilities Bonds payable 1,397,469% 1,397,469

Answer 1

Date January 1st Issue Entry 1. Record the Bond Issue General Journal Debit Credit Cash 1500893 Premium on Bonds Payable 50893 Bonds Payable 1450000 Record the issue of the Bond with Discount Date Journal entris for interest Payment 2. Record the interest payment and amotization on June 30 First Year General Journal Debit Credit Jun-30 Interest Expenses 44388 Premium on Bonds Payable 6362 Cash 50750 Record the interest Expense and amortization of Premium

Balance Sheet Long term Liabilites Bonds Payables 1450000 ADD: Premium on Bonds Payable (50893-6362) 44531 1494531