These are absolutely killing me. I am beyond lost - Wainwright Electric sold $3,

Question

These are absolutely killing me. I am beyond lost -

Wainwright Electric sold $3,022,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1 and pay interest July 1 and January 1. Wainwright Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104. Assume no interest is accrued on June 30.

A) Prepare the journal entry to record the issuance of the bonds on January 1, 2014.

B) Prepare a bond premium amortization schedule for the first 4 interest periods.

C) Prepare the journal entries for interest and the amortization of the premium in 2014 and 2015.

D) Show the balance sheet presentation of the bond liability at December 31, 2015.

LIST OF ACCOUNTS -

Accounts Payable
Accounts Receivable
Bonds Payable
Cash
Cash Dividends
Discount on Bonds Payable
Dividends Payable
Gain on Bond Redemption
Interest Expense
Interest Payable
Lease Liability
Loss on Bond Redemption
Mortgage Payable
Paid-in Capital in Excess of Par-Common Stock
Paid-in Capital in Excess of Par-Preferred Stock
Preferred Stock
Premium on Bonds Payable

Explanation / Answer

A)

B)

C)

D)

Date Account title and explanation debit ($) credit ($) Jan1, 2014 Cash 3142880 Bond Payable 3022000 Premium on bond payable 120880 (bonds with face value $3022000 sold at $104 per bond with a premium of $120880) NOTE: Premium on bond = (3022000/100) * (104-100) = $120880

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