Question

Cheyenne Corporation sold $2,300,000, 6%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Cheyenne Corporation uses the straight-line method to amortize bond premium or discount.

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 106. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
Dec. 31	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount

Prepare journal entries to record the issuance of the bonds and bond interest expense for 2022, assuming that the bonds sold at 95. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
Dec. 31	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount

1.) Show the balance sheet presentation for the bond issue at December 31, 2022, using the 106 selling price.

2.) Show the balance sheet presentation for the bond issue at December 31, 2022, using the 95 selling price.

(note: this is due in 1 hour. please help me out! I appreciate it a lot!)

Answer 1

1
		Debit	Credit
Jan 1	Cash	2438000		=2300000*1.06
	Bonds payable		2300000
	Premium on Bonds payable		138000
Dec 31	Interest expense	110400
	Premium on Bonds payable	27600		=138000/5
	Interest payable		138000	=2300000*6%
2
		Debit	Credit
Jan 1	Cash	2185000		=2300000*0.95
	Discount on Bonds payable	115000
	Bonds payable		2300000
Dec 31	Interest expense	161000
	Discount on Bonds payable		23000	=115000/5
	Interest payable		138000	=2300000*6%
3
1	Balance Sheet (Partial)
	December 31,2022
	Current Liabilities
	Interest payable		138000
	Long term Liabilities
	Bonds payable	2300000
	Add:Premium on Bonds payable	110400	2410400	=138000-27600
2	Balance Sheet (Partial)
	December 31,2022
	Current Liabilities
	Interest payable		138000
	Long term Liabilities
	Bonds payable	2300000
	Less:Discount on Bonds payable	92000	2208000	=115000-23000