Question

Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.
a. Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 103 and (2) 98.
b. Prepare an amortization table for issuance of the bonds sold at 103 for the first three interest payments.
c. Prepare an amortization table for issuance of the bonds sold at 98 for the first three interest payments.
d. Prepare the journal entries to record interest expense for 2017 under both of the bond issuances assuming they sold at: (1) 103 and (2) 98.

Please do not copy from chegg otherwise i have to report the answer. Explain the answer throughly with showing each step of the calculation.

Answer 1

no	Date	Account titles & Explanations				Debit	Credit
1)	1/1/2017	Cash	(3,000,000*1.03)			3,090,000
		Premium on bonds payable					90,000
		Bonds payable					3,000,000
2)	1/1/2017	Cash	(3,000,000*.98)			2,940,000
		Discount on bonds payable				60,000
		Bonds payable					3,000,000
Annual	interest to	interest	Premium	Unamortized	Bonds
interest	be paid	expense to	Amortization	premium	Carrying
periods		be recorded			value
Issue date				90,000	3,090,000
1	240,000	231,000	9,000	81,000	3,081,000
2	240,000	231,000	9,000	72,000	3,072,000
3	240,000	231,000	9,000	63,000	3,063,000
	interest to be paid =		face value * coupon rate
			3,000,000*8%
	premium amortized =		90,000/10
			9,000
Annual	interest to	interest	Discount	Unamortized	Bonds
interest	be paid	expense to	Amortization	Discount	Carrying
periods		be recorded			value
Issue date				60,000	2,940,000
1	240,000	246,000	6,000	54,000	2,946,000
2	240,000	246,000	6,000	48,000	2,952,000
3	240,000	246,000	6,000	42,000	2,958,000
	unamortized discount=		60000/10
			6000
no	Date	Account titles & Explanations				Debit	Credit
1)	12/31/2017	interest expense				231,000
		premium on bonds payable				9,000
		interest payable					240,000
2)	12/31/2017	interest expense				246,000
		discount on bonds paayble					6,000
		interest payable					240,000