Question

In: Accounting

Bridgeport Corporation sold $2,250,000, 7%, 5-year bonds on January 1, 2022. The bonds were dated January...

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

Solutions

Expert Solution

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

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