Exercise 10-20 Sunland Company issued $471,000, 9%, 30-year bonds on January 1,

Question

Exercise 10-20 Sunland Company issued $471,000, 9%, 30-year bonds on January 1, 2017, at 106, Interest is payable annually on January 1, Sunland uses straight-line amortization for bond premium or discount. Prepare the journal entries to record the following events. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2017 (c) The payment of interest on January 1, 2018. (d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded No. Date Account Titles and Explanation Debit (a) Jan. 1, 2017 Cash 499,260 Bonds Payable 471,000 Premium on Bonds Payable 28.260 (b) Dec. 31, 2017 interest Expense Pr emium on Bonds Payable erest Payable (c) Jan. 1, 2018 Tnterest Payable Cash (d) Jan. 1, 2047 Bonds Payable 471,000 Cash 471,000 nghi 2000-2017 ty Juhn Wiley & Suns lric D1 tetaledumpednies Al nghis leser ved

Explanation / Answer

No. Date Account Titles and Explanation Debit Credit (b) Dec. 31, 2017 Interest expense 41448 Premium on Bonds Payable ($28260/30) 942 Interest payable ($471000 x 9%) 42390 (c) Jan. 1, 2018 Interest payable 42390 Cash 42390

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