Additional Exercise 286 On January 1, 2018, Sunrise Corporation issued $4,000,00

Question

Additional Exercise 286 On January 1, 2018, Sunrise Corporation issued $4,000,000, 8%, 5-year bonds dated January 1, 2018, at 95, The bonds pay annual interest on January 1. The company uses the straight-line method of amortization and has a calendar year end. 1 Prepare all the journal entries that Sunrise Corporation would make related to this bond issue through January 1, 2019. Be sure to indicate the date on which the entries would be made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Jan. 1, 2018

Explanation / Answer

Jan-1-18 Cash 3800000 =4000000*0.95 Discount on Bonds payable 200000         Bonds payable 4000000 Dec-31-18 Interest expense 360000       Discount on Bonds payable 40000 =200000/5       Interest payable 320000 =4000000*8% Jan-1-19 Interest payable 320000        Cash 320000

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