On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable 1 answer below »

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: Hide

a. Issuance of the bonds.

If an amount box does not require an entry, leave it blank, or enter zero “0”. Bonds Payable

Cash

Interest Expense

Interest Payable

Premium on Bonds Payable

Correct 2 of Item 1

Correct 3 of Item 1

Correct 4 of Item 1 Cash

Discount on Bonds Payable

Interest Expense

Interest Payable

Premium on Bonds Payable

Correct 5 of Item 1

Correct 6 of Item 1

Correct 7 of Item 1 Bonds Payable

Cash

Discount on Bonds Payable

Interest Payable

Correct 8 of Item 1

Correct 9 of Item 1

Correct 10 of Item 1

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Solution Hide

b. First annual interest payment.

Correct 2 of Item 2

Correct 3 of Item 2

Correct 4 of Item 2

Correct 5 of Item 2

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c. Amortization of bond premium for the year, using the straight-line method of amortization.

Correct 2 of Item 3

Correct 3 of Item 3

Correct 4 of Item 3

Correct 5 of Item 3

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