Lore Corporation sold $2,000,000, 6%, 10-year bonds on January 1, 2010. The bonds were dated January 1, 2010, and pay interest on January 1. Lore Corporation uses the straight-line method to amortize bond premium or discount.
Hint: Prepare journal entries to record issuance of bonds, interest, and straight-line amortization, and balance sheet presentation.
Instructions:
(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2010, assuming that the bonds sold at 103.
(b) Prepare journal entries as in part (a) assuming that the bonds sold at 98.
(c) Show the balance sheet presentation for the bond issue at December 31, 2010, using (1) the 103 selling price, and then (2) the 98 selling price.