(TCO D) On January 1, 2010, Solis Co. issued its 10% bonds in the face amount...

3.7 Ratings (692 Votes)

Solution 1:

Journal Entries
Date	Particulars	Debit	Credit
1-Jan-10	Cash Dr	$3,405,000.00
	To Bond Payable		$3,000,000.00
	To Premium on bond payable		$405,000.00
	(To record issue of bond at premium)

Solution 2:

Journal Entries - Solis Co.
Date	Particulars	Debit	Credit
1-Jul-10	Interest expense Dr ($3,405,000*4%)	$136,200.00
	Premium on bond payable Dr	$13,800.00
	To Cash ($3,000,000*5%)		$150,000.00
	(To record interest payment and premium amortization)

31-Dec-10	Interest expense Dr [($3,405,000 - $13,800)*4%]	$135,648.00
	Premium on bond payable Dr	$14,352.00
	To Interest Payable ($3,000,000*5%)		$150,000.00
	(To record interest payment and premium amortization)

1-Jan-11	Interest Payable Dr	$150,000.00
	To Cash		$150,000.00
	(To record payment of interest)

Solution 3:

Unamortized premium balance on bond payable as of December 31, 2011 = $346,399

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