Hi, I have one question on my homework for ACC 122. I don't understand how to get the answer and have worked on it for awhile now.
Soprano Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2010. The bonds were dated January 1 and pay interest July 1 and January 1. Soprano Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104. Assume no interest is accrued on June 30.
I got the journal entries down, no problem..they are as follows:
2010 July 1 Bond interest expense 144,000
...................Premium Bonds Payable 6,000
................................Cash ..........................150,000
2010 Dec. 31 Bond interest expense 144,000
.....................Premium Bonds Payable 6,000
..............................Bond interest payable........150,000
2011 Jan. 1 Bond interest Payable 150,000
...........................Cash..............................150,000
2011 July 1 Bond interest expense 144,000
..................Premium Bonds Payable 6,000
...............................Cash..........................150,000
2011 Dec. 31 Bond interest expense 144,000
...................Premium Bonds Payable 6,000
............................Bond interest payable........150,000
The journal entries are all correct. Now, the next section I have to fill out the balance sheet and cannot get the amounts correct. I have no idea why.
Show the balance sheet presentation of the bond liability at December 31, 2011.
Current Liabilities
Bond Interest Payable ______(??? Not 450,000)
Long-term Liabilities
Bonds Payable, due 2020: 3,000,000
Add: Premium on Bonds Payable ______(??? Not 102,000)
Soprano Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2010. The bonds were dated January 1 and pay interest July 1 and January 1. Soprano Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104. Assume no interest is accrued on June 30.
I got the journal entries down, no problem..they are as follows:
2010 July 1 Bond interest expense 144,000
...................Premium Bonds Payable 6,000
................................Cash ..........................150,000
2010 Dec. 31 Bond interest expense 144,000
.....................Premium Bonds Payable 6,000
..............................Bond interest payable........150,000
2011 Jan. 1 Bond interest Payable 150,000
...........................Cash..............................150,000
2011 July 1 Bond interest expense 144,000
..................Premium Bonds Payable 6,000
...............................Cash..........................150,000
2011 Dec. 31 Bond interest expense 144,000
...................Premium Bonds Payable 6,000
............................Bond interest payable........150,000
The journal entries are all correct. Now, the next section I have to fill out the balance sheet and cannot get the amounts correct. I have no idea why.
Show the balance sheet presentation of the bond liability at December 31, 2011.
Current Liabilities
Bond Interest Payable ______(??? Not 450,000)
Long-term Liabilities
Bonds Payable, due 2020: 3,000,000
Add: Premium on Bonds Payable ______(??? Not 102,000)