1. A 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.
Instructions
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2010.
(b) Prepare a bond premium amortization schedule for the first 4 interest periods.
(c) Prepare the journal entries for interest and the amortization of the premium in 2010 and 2011.
(d) Show the balance sheet presentation of the bond liability at December 31, 2011.