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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) Show the balance sheet presentation for the bond issue at December 31, 2022, using the 102 selling price.

(2) Show the balance sheet presentation for the bond issue at December 31, 2022, using the 96 selling price.

Solutions

Expert Solution

The entry for Bonds issuance and Interest is:
At 102: Debit Credit
Jan 1 Cash 2295000 =2250000*1.02
     Bonds payable 2250000
     Premium on Bonds payable 45000
Dec 31 Interest expense 148500
Premium on Bonds payable 9000 =45000/5
      Interest payable 157500 =2250000*7%
At 96:
Debit Credit
Jan 1 Cash 2160000 =2250000*0.96
Discount on Bonds payable 90000
     Bonds payable 2250000
Dec 31 Interest expense 175500
      Discount on Bonds payable 18000 =90000/5
      Interest payable 157500 =2250000*7%
1
Balance Sheet (Partial)
December 31,2022
Current Liabilities
Interest payable 157500
Long term Liabilities
Bonds payable 2250000
Add:Premium on Bonds payable 36000 2286000 =45000-9000
Balance Sheet (Partial)
December 31,2022
Current Liabilities
Interest payable 157500
Long term Liabilities
Bonds payable 2250000
Less:Discount on Bonds payable 72000 2178000 =90000-18000

ekkarill92 answered 10 months ago
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