Skysong, Inc. issues $3.6 million, 10-year, 12% bonds at 104, with interest paya
ID: 2528734 • Letter: S
Question
Skysong, Inc. issues $3.6 million, 10-year, 12% bonds at 104, with interest payable on January 1. The straight-line method is used to amortize bond premium ? (a) Your answer is correct. 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. Do not indent manually. Date Account Titles and Explanation Jan. 1 Cash Debit Credit 3744000 Bonds Payable 3600000 Premium on Bonds Payable 144000 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT Attempts: 1 of 3 usedExplanation / Answer
Answers
Year
Interest payable ($3.6 million x 12%) (A)
Premium amortised (B)
Interest expense (A-B)
2017
$ 4,32,000.00
$ 14,400.00
$ 4,17,600.00
2018
$ 4,32,000.00
$ 14,400.00
$ 4,17,600.00
Date
Accounts Title
Debit
Credit
31-Dec 2017
Interest expense [balancing figure: $432000 - $14400]
$ 4,17,600.00
Premium on Bonds Payable [$144000/10 years]
$ 14,400.00
Interest payable [3.6 million x 12%]
$ 4,32,000.00
(interest expense recorded)
Year
Interest payable ($3.6 million x 12%) (A)
Premium amortised (B)
Interest expense (A-B)
2017
$ 4,32,000.00
$ 14,400.00
$ 4,17,600.00
2018
$ 4,32,000.00
$ 14,400.00
$ 4,17,600.00
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