I need help with part B figures and account titles please Golden Inc. issues $5,

Question

I need help with part B figures and account titles please

Golden Inc. issues $5,000,000, 5-year, 12% bonds at 104, with interest payable annually on January 1. The straight-line method is used to amortize bond Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered Prepare the adjusting journal entry to record interest expense and bond premium amortization on December 31, 2017. (Credit account titles are automaticall

Explanation / Answer

Interest to be paid in cash would be $5200000 * 12% = $600000

Premium to be amortized = $200000 / 5 = $40000

The journal entry would be:

Interest Expense Dr $560000

Premium on issue of bonds Dr $40000

To Cash $600000

(Being interest paid and premium amortized on straight line method)

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