Cherney Electric sold $500,000, 10%, 10-year bonds on January 1, - 14013

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Problem 15-2A

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Cherney Electric sold $500,000, 10%, 10-year bonds on January 1, 2012. The bonds were dated January 1 and paid interest on January 1 and July 1. The bonds were sold at 104.

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) At December 31, 2012, the balance in the Premium on Bonds Payable account is $18,000. Show the balance sheet presentation of accrued interest and the bond liability at December 31, 2012. (For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2017.)

(c) On January 1, 2014, when the carrying value of the bonds was $516,000, the company redeemed the bonds at 105. Record the redemption of the bonds assuming that interest for the period has already been paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

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Problem 15-2A.docx
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