Chapter 2 Problem 2-3
Requirement 1
2008
April 1 Cash (7,000,000 x 106%) 7,420,000
Bonds payable 7,000,000
Premium on bonds payable 420,000
Oct. 1 Interest expense (7,000,000 x 12% x 6/12) 420,000
Cash 420,000
Dec. 31 Interest expense (7,000,000 x 12% x 3/12) 210,000
Accrued interest payable 210,000
31 Premium bonds payable 31,500
Interest expense (420,000 / 10 x 9/12) 31,500
2009
Jan. 1 Accrued interest payable 210,000
Interest expense 210,000
April 1 Interest expense 420,000
Cash 420,000
Oct. 1 Interest expense 420,000
Cash 420,000
Dec. 31 Interest expense 210,000
Accrued interest payable 210,000
31 Premium on bonds payable 42,000
Interest expense (420,000 / 10) 42,000
Requirement 2
Noncurrent liabilities:
Bonds payable 7,000,000
Premium on bonds payable 346,500
Book value 7,346,500
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