TBS F4 - Bonds

Question 1

Stated Interest Rate > Market Rate(effective interest)

Answer 1

Premium Bonds

Question 2

When they say “bond proceeds were $235,931” and face value is $200,00. Which one do we recorder for Issuance on sale?

Answer 2

We record the $235,931
Debit:Cash $235,931
Credit:Bond Payable $200,000
Credit: PREMIUM BP $35,931

Question 3

Prepair a JE for Premium Entry to record payment:

Answer 3

Debit: Bond Interest Exp
Debit: PREMIUM BP
Credit: Cash (Interest Pmt #4)
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