Question

Bridgeport Corporation sold $2,250,000, 7%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Bridgeport Corporation uses the straight-line method to amortize bond premium or discount.


1. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 102

2. Prepare journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 96

Answer 1

1. Journal entries:
January 1, 2022	Cash account (2250000*102%)	$ 2,295,000
	Bonds payablee		$ 2,250,000
	Prremium on bonds payable		$      45,000
December 31, 2022	Interest expenses	$    148,500
	Premium on bonds payable (45,000/5)	$        9,000
	Interest payable (2,250,000*7%)		$    157,500
2. Journal entries:
January 1, 2022	Cash account (2250000*96%)	$ 2,160,000
	Discount on bonds payable	$      90,000
	Bonds payablee		$ 2,250,000
December 31, 2022	Interest expenses	$    175,500
	Discount on bonds payable (90000/5)		$      18,000
	Interest payable (2,250,000*7%)		$    157,500