Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2011. Bonds were dated July 1, 2011, and pay interest July 1 and January 1. Elkins Company uses straight-line method to amortize bond premium or discount. Suppose no interest is accrued on June 30.
Prepare entries to record issuance of bonds, interest, and straight-line amortization of bond premium and discount.
(a) Prepare all essential journal entries to record issuance of bonds and bond interest expense for 2011, supposing that bonds sold at 104.
(b) Prepare journal entries as in part (a) assume that the bonds sold at 98.
(c) Demonstrate balance sheet presentation for each bond issue at December 31, 2011.
Premium on bonds payable $95,000
Discount on bonds payable $47,500