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Pharoah Company issued $1,600,000 of bonds on January 1, 2020. Prepare the journal entry to record the issuance of the bonds

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Answer #1

Journal entry

No General journal Debit Credit
a Cash 1600000
Bonds payable 1600000
b Cash (1600000*.97) 1552000
Discount on bonds payable 48000
Bonds payable 1600000
c Cash 1632000
Bonds payable 1600000
Premium on bonds payable 32000

2) Redemption

Date account and explanation Debit Credit
Bonds payable 1600000
cash 1600000

3) Journal entry

Date account and explanation Debit Credit
Bonds payable 1600000
Premium on bonds payable 9750
Gain on retirement 57750
Cash (16000000*.97) 1552000
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