The Sage Company issued $230,000 of 12% bonds on January 1, 2017. The bonds are due...

The Sage Company issued $230,000 of 12% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at 102. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Sage Company records straight-line amortization semiannually.

Expert Solution

Face Value of Bonds	230,000.00
Money received on issue = 200,000*102%	234,600.00
Premium on Issue of bonds= 234,600 - 230,000	4,600.00
No of periods	10.00
Premium written off every half years = 4600/10	460.00

Journal Entries
Date	Particulars	Dr Amt	Cr Amt
Jan 01 '2017	Cash A/C Dr	234,600.00
	To Bonds Payable		230,000.00
	To Premium on Bonds payable		4,600.00

Jul 01 '2017	Interest Expense Dr	13,340.00
	Premium on Bonds Payable Dr	460.00
	To Cash		13,800.00
	(230,00012%1/2)
Dec 31'2017	Interest Expense Dr	13,340.00
	Premium on Bonds Payable Dr	460.00
	To Interest payable		13,800.00

ekkarill92 answered 2 years ago

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