Paris Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2019

Paris Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2019. The bonds were dated January 1 and pay interest annually on January 1. Paris Electric uses the straight-line method to amortize bond premium or discount. The bonds were sold at 104.

Instructions

Prepare the journal entry to record the issuance of the bonds on January 1, 2019.
Prepare a bond premium amortization schedule for the first 4 interest periods.
Prepare the journal entries for interest and the amortization for the premium in 2019 and 2020.
Show the balance sheet presentation of the bond liability at December 31, 2020.

Solution

a.

Paris Electric
Journal Entry for 2019

b.

Paris Electric
Bond Premium Amortization Schedules
Straight-Line Method-Annual Interest Payments
$3,000,000 of 10%, 10-Year Bonds

c.

Paris Electric
Journal Entry for interest and the amortization of the premium in 2019 and 2020.

d.

Paris Electric
Balance sheet(Partial).

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