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On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:

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Question 17:

On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:

(a) Issuance of the bonds.
(b) First annual interest payment.
(c) Amortization of bond premium for the year, using the straight-line method of amortization.

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Here are your answers.

The entry for the issuance of the bonds would be:

Cash $2,125,000
Bonds Payable ...

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