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Question

ment/takeAssignmentMain.do?inwoker &takeAssignmentSessionlocator assignment-take8inprogressvfalse Calculator Bond Premium, Entries for Bonds Payable Transactions Campbell Inc. produces and sells outdoor equipment. On July 2, Year 1, Campbell issued t 13,000,000 of 10-year, 11% bonds at a $13,810,050. Interest on the bonds Is parable semlannualy/ on December and Sune fiscal ear of the company is the calendar vear market (effective) íterese rate of 10%, recents an or If an amount box does not require an entry, leave ie b 1. Journalize the entry to record the amount of cash proceeds from theun Cash 13,010 050 3300 09 Premitum on Bords Paivable Bonds Payabie y Bonds Pavable is alwars recorded t face value. Anr difference in issue price is lected in a premium or The stralght-line method of amortization provides equal amounts of amortacion over the ife of the bond

Explanation / Answer

3. Total interest expense for year 1 = $674497

Date Accounts title Dr Cr 1. Year 1 July 1 Cash 13810050 To premium on bonds payable 810050 To Bonds payable 13000000 2 a 31 Dec Interest expense 674497 premium on bonds payable [810050 /(10*2)] 40503 To cash [13000000* 11%/2] 715000 b year 2 30 June Interest expense 674497 premium on bonds payable [810050 /(10*2)] 40503 To cash [13000000* 11%/2] 715000

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