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Prepare the journal entries for interest and amortization

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Question

Wildhorse Electric sold $3,900,000, 8%, 10-year bonds on January 1, 2020. The bonds were dated January 1 and pay interest annually on January 1. Wildhorse Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 102.

A. Prepare the journal entry to record the issuance of the bonds on January 1, 2020.

B. A bond premium amortization schedule for the first 4 interest periods.

Annual Interest Periods

Interest to Be Paid

Interest Expense to Be Recorded

Premium Amortization

Unamortized Premium

Bond Carrying Value

C. Prepare the journal entries for interest and the amortization of the premium in 2020 and 2021.

D. Show the balance sheet presentation of the bond liability at December 31, 2021.

Reference no: EM132316942

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