Recording Bonds at a Premium and a Discount
On January 1, 2012, Hampton, Inc. issues $3,000,000 of 5-year, 10% bonds with interest payable on July 1 and January 1. Hampton prepares financial statements on December 31 and amortizes any discount or premium using the straight-line method.
Required:
a. Prepare all journal entries necessary in 2012 assuming the bonds were issued at 96. For a compound entries, if an amount box does not require an entry, leave it blank. If required, round to the nearest dollar.
b. Prepare all journal entries necessary in 2012 assuming the bonds were issued at 103. For a compound entries, if an amount box does not require an entry, leave it blank. If required, round to the nearest dollar.