Edmonton Corp. issued 5-year, 9.5% bonds with a face value of $700,000 on Januar

Question

Edmonton Corp. issued 5-year, 9.5% bonds with a face value of $700,000 on January 1, 2018, for $726,000. The bonds pay interest on June 30 and December 31 of each year. 1. Will the bonds be issued at Par, at a Premium or at a Discount? 2. In the journal paper provided, prepare the Journal Entry to record the issuance of the bonds. 3. In the journal paper provided, prepare the Journal Entries to record interest on June 30, 2018 AND on December 31, 2018 using the Straight Line method of amortization 4. Show how the bonds and any related accounts will appear on the December 31, 2018 Financial Statements.

Explanation / Answer

1. The bonds are issued at a premium.

2.

3.

4. Edmonton Corp

Edmonton Corp.

Income Statement ( Partial)

For the year ended December 31, 2018

Balance Sheet ( Partial)

December 31, 2018

Edmonton Corp.

Statement of Cash Flows ( Partial)

For the year ended December 31, 2018

Date Account Titles Debit Credit $ $ January 1, 2018 Cash 726,000 Bonds Payable 700,000 Premium on Bonds Payable 26,000

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