E14-2 (Classification) The following items are found in the financial statements.
(a) Discount on bonds payable
(b) Interest expense (credit balance)
(c) Unamortized bond issue costs
(d) Gain on redemption of bonds
(e) Mortgage payable (payable in equal amounts over next 3 years)
(f) Debenture bonds payable (maturing in 5 years)
(g) Premium on bonds payable
2(h) Notes payable (due in 4 years)
(i) Income bonds payable (due in 3 years)
E14-1 (Classification of Liabilities) Presented below are various account balances.
(a) Bank loans payable of a winery, due March 10, 2016. (The product requires aging for 5
years before
sale.)
(b) Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.
(c) Serial bonds payable, $1,000,000, of which $250,000 are due each July 31.
(d) Amounts withheld from employees' wages for income taxes.
(e) Notes payable due January 15, 2015.
(f) Credit balances in customers' accounts arising from returns and allowances after collection in full of
account.
(g) Bonds payable of $2,000,000 maturing June 30, 2014.
(h) Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.)
(i) Deposits made by customers who have ordered goods

E14-3 (Entries for Bond Transactions) Presented below are two independent situations.
1. On January 1, 2012, Divac Company issued $300,000 of 9%, 10-year bonds at par. Interest is payable
quarterly on April 1, July 1, October 1, and January 1.
2. On June 1, 2012, Verbitsky Company issued $200,000 of 12%, 10-year bonds dated January 1 at par
plus accrued interest. Interest is payable semiannually on July 1 and January 1.