Question

Brief Exercise 10-10

Frankum Company has issued three different bonds during 2015. Interest is payable semiannually on each of these bonds.

1.		On January 1, 2015, 1,390, 9%, 5-year, $1,200 bonds dated January 1, 2015, were issued at face value.
2.		On July 1, $739,200, 10%, 5-year bonds dated July 1, 2015, were issued at 102.
3.		On September 1, $320,400, 8%, 5-year bonds dated September 1, 2015, were issued at 99.

Prepare the journal entries to record each bond transaction at the date of issuance. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1
July 1
Sept. 1

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	Cash	$ 1,668,000
	Bonds Payable		$ 1,668,000
July 1	Cash	$ 753,984
	Bonds Payable		$ 739,200
	Premium on Bonds Payable		$ 14,784
Sept. 1	Cash	$ 317,196
	Discount on Bonds Payable	$ 3,204
	Bonds Payable		$ 320,400

Note:

1. Bonds Value = 1,390 * $ 1200

2. Cash =  $739,200 * 102%

Bonds Payable =  $739,200

Premium = $739,200 * 2%

3. Bonds Payable = $320,400

Discount = $320,400 * 1%

Cash = $320,400 *99%