Sandhill Co. sold $3,300,000, 7%, 10-year bonds on January 1, 2017. The bonds were dated January...

Sandhill Co. sold $3,300,000, 7%, 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.

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 104 at December 31, 2017.

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 97 at December 31, 2017.

Solutions

Expert Solution

Solution a: (Bonds Issued at 104)

Face Value = $3,300,000

Issue Price = $3,300,000 *104% = $3,432,000

Maturity = 10 years

Premium on Bonds payable = $3432000 - $3300000 = $132,000

Unamortized Premium on December 31, 2017 = $132000 - ($132000*1/10) = $132000 - $13200 = $118,800

Sandhill Co.
Balance Sheet (Partial)
As at December 31, 2017
Long Term Liabilities:
Bond Payable	$33,00,000
Add: Unamortized Premium	$1,18,800

Carrying Value	$34,18,800

Solution b: (Bonds Issued at 97)

Face Value = $3,300,000

Issue Price = $3,300,000 *97% = $3,201,000

Maturity = 10 years

Discount on Bonds payable = $3300000 - $3201000 = $99,000

Unamortized Discount on December 31, 2017 = $99000 - ($99000*1/10) = $99000 - $9900 = $89,100

Sandhill Co.
Balance Sheet (Partial)
As at December 31, 2017
Long Term Liabilities:
Bond Payable	$33,00,000
Less: Unamortized Discount	$89,100

Carrying Value	$32,10,900

ekkarill92 answered 6 months ago

Next > < Previous

Related Solutions

Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2017. The bonds were dated January...

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....

Kershaw Electric sold $4,600,000, 10%, 10-year bonds on January 1, 2017. The bonds were dated January...

Kershaw Electric sold $4,600,000, 10%, 10-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and paid interest on January 1. The bonds were sold at 95. At December 31, 2017, $8,100 of the Discount on Bonds Payable account has been amortized. Show the balance sheet presentation of the long-term liability at December 31, 2017. On January 1, 2019, when the carrying value of the bonds was $4,386,200, the company redeemed the bonds at 103. Record the...

Wildhorse Co. sold $3,200,000, 9%, 10-year bonds on January 1, 2022. The bonds were dated January...

Wildhorse Co. sold $3,200,000, 9%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. Prepare the journal entries to record interest expense for 2022 under both of the bond issuances assuming they sold at: (1) 101 and (2) 98. Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 101 at...

Blossom Company sold $3,100,000, 7%, 10-year bonds on January 1, 2022. The bonds were dated January...

Blossom Company sold $3,100,000, 7%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 101 and (2) 95. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare amortization table for issuance of the...

Blossom Company sold $3,100,000, 7%, 10-year bonds on January 1, 2022. The bonds were dated January...

Crane Company sold $5,900,000, 7%, 15-year bonds on January 1, 2022. The bonds were dated January...

Crane Company sold $5,900,000, 7%, 15-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on December 31. The bonds were sold at 98. Prepare the journal entry to record the issuance of the bonds on January 1, 2022. (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...

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,...

Culver Corporation sold $3,000,000, 7%, 5-year bonds on January 1, 2022. The bonds were dated January...

Culver Corporation sold $3,000,000, 7%, 5-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. Culver 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 104. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare journal entries to...

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.

Jack's Electric sold $4,495,000, 13%, 10-year bonds on January 1, 2020. The bonds were dated January...

Jack's Electric sold $4,495,000, 13%, 10-year bonds on January 1, 2020. The bonds were dated January 1, 2020, and paid interest on January 1. The bonds were sold at 98. Prepare the journal entry to record the issuance of the bonds on January 1, 2020. At December 31, 2020, $7,500 of the Discount on Bonds Payable account has been amortized. Show the balance sheet presentation of the long-term liability at December 31, 2020. On January 1, 2022, when the carrying...

Subjects