On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)First annual interest payment
(record as separate entry from premium amortization).
(c)Amortization of bond premium for the year, using the straight-line method of amortization.

Question

On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)First annual interest payment 
(record as separate entry from premium amortization).
(c)Amortization of bond premium for the year, using the straight-line method of amortization.

Quizplus · Accepted Answer

The Answer of On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)First annual interest payment 
(record as separate entry from premium amortization).
(c)Amortization of bond premium for the year, using the straight-line method of amortization.

On the First Day of the Current Fiscal Year, $2,000,000