BONDS ISSUED AT A PREMIUM
Wang Corporation issued the following bonds ata premium:
Date of issue and sale: ...........March 1, 20-1
Principal amount: .................$250,000
Sale price of bonds: ...............103
Denomination of bonds: .........$500
Life of bonds: .....................20 years
Stated rate: ........................8%, payable semiannually on August
.......................................31and February 28
REQUIRED
1. Prepare journal entries for:
(a) Issuance of the bonds at a premium.
(b) Interest payment and premium amortization on the bonds on August 31,20-1.
(c) Year-end adjustment on the bonds for 20-1.
(d) Reversing entry for the beginning of 20-2.
(e) Interest payments and premium amortization on the bonds for 20-2
(February 28 and August 31).
2. Calculate the carrying value of the bonds on August 31, 20-2.