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    Bond transactions

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    Peru Corporation sold $1,500,000 6% 10 -year bonds on January 1, 2007. The bonds were
    dated January 1, 2007, and pay interest on January 1. Peru Corporation uses the straight-line method to amortize bond premium or discount.

    Instructions:
    (a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2007,
    assuming that the bonds sold at 103

    Jan 1 Account title Amount
    Account title Amount
    Account title Amount

    Dec 31 Account title Amount
    Account title Amount
    Bond Interest Payable Amount

    (b) Prepare journal entries as in part (a) assuming that the bonds sold at 98

    Jan 1 Account title Amount
    Account title Amount
    Account title Amount

    Dec 31 Account title Amount
    Account title Amount
    Account title Amount

    (c) Show the balance sheet presentation for the bond issue at December 31, 2007, using
    (1) the 103 selling price, and then
    Current Liabilities
    Account title Amount

    Long-term Liabilities
    Account title Amount
    Account title Amount Formula

    (2) the 98 selling price.
    Current Liabilities
    Account title Amount

    Long-term Liabilities
    Account title Amount
    Account title Amount Formula

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    https://brainmass.com/business/journal-entries/bond-transactions-346582

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    Solution Summary

    The solution explains the journal entries relating to bond transactions

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