Long-Term Liabilities

Saberhagen Company sold $3,500,000, 8%, 10-year bonds on January 2020. The bonds were dated January 1, 2020 and pay interest annually on January Saberhagen Company uses the straight-line method to amortize bonds premium or discount.

Instructions

1. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2020, assuming that the bonds sold at 104.
2. Prepare journal entries as ain part (a) assuming that the bonds sold at 98.
3. Show balance sheet presentation for the bonds at December 31, 2020, for both the requirements in (a) and (b).

Solution