Question

In: Accounting

Blossom Company issues $1,000,000, 10-year, 6% bonds at 92, with interest payable each January 1.

Brief Exercise 15-04 a-b

Blossom Company issues $1,000,000, 10-year, 6% bonds at 92, with interest payable each January 1.

Prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1












Assuming instead that the above bonds sold for 101, prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1













Solutions

Expert Solution

1) If bonds sold at $92

Date Account Titles and Explanation Debit Credit
Jan 01 Cash $920,000
Discount on Bonds Payable $80,000
Bonds Payable $1,000,000
(Being bonds sold at premium)

2) If bonds sold at $101

Date Account Titles and Explanation Debit Credit
Jan 01 Cash $1,010,000
Premium on Bonds Payable $10,000
Bonds Payable $1,000,000
(Being bonds sold at Premium)

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