Oriole Company sold $3,250,000, 9%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. 1. Prepare the journal entries to record interest expense for 2022 under both of the bond issuances assuming they sold at: (1) 101 and (2) 95. 2.Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 101 at December 31, 2022 3. Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 95 at December 31, 2022. journal entry Date Account titles & explanations Debit Credit 1-Jan-22 Cash($3,250,000 *1.01) $3282500 Premium on bonds $32,500 Bonds payable $3,250,000 (Being bonds issued at premium) 1-Jan-22 Cash(3,250,000 *0.95) $3087500 Discount on bonds $162,500 Bonds payable $3,250,000 (Being bonds issued at discount) Step 2 Amortization table for issue of bonds 101 Period Interest Interest Premium Unamortized Bonds Paid Expense amortization premium Carrying value $32,500 $3282500 1 $292,500 $289,250 $3,250 $29,250 $3,279,250 2 $292,500 $289,250 $3,250 $26,000 $3,276,000 3 $292,500 $289,250 $3,250 $22,750 $3,272,750 Amortization table for issue of bonds 95 Period Interest Interest Discount Unamortized Bonds Paid Expense amortization Discount Carrying value $162,500 $3087500 1 $292,500 $276,250 $16,250 $146,250 $3,071,250 2 $292,500 $276,250 $16,250 $130,000 $3,055,000 3 $292,500 $276,250 $16,250 $113,750 $3,038,750

Oriole Company sold $3,250,000, 9%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually. 1. Prepare the journal entries to record interest expense for 2022 under both of the bond issuances assuming they sold at: (1) 101 and (2) 95. 2.Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 101 at December 31, 2022 3. Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 95 at December 31, 2022. journal entry Date Account titles & explanations Debit Credit 1-Jan-22 Cash($3,250,000 1.01) $3282500 Premium on bonds $32,500 Bonds payable $3,250,000 (Being bonds issued at premium) 1-Jan-22 Cash(3,250,000 0.95) $3087500 Discount on bonds $162,500 Bonds payable $3,250,000 (Being bonds issued at discount) Step 2 Amortization table for issue of bonds 101 Period Interest Interest Premium Unamortized Bonds Paid Expense amortization premium Carrying value $32,500 $3282500 1 $292,500 $289,250 $3,250 $29,250 $3,279,250 2 $292,500 $289,250 $3,250 $26,000 $3,276,000 3 $292,500 $289,250 $3,250 $22,750 $3,272,750 Amortization table for issue of bonds 95 Period Interest Interest Discount Unamortized Bonds Paid Expense amortization Discount Carrying value $162,500 $3087500 1 $292,500 $276,250 $16,250 $146,250 $3,071,250 2 $292,500 $276,250 $16,250 $130,000 $3,055,000 3 $292,500 $276,250 $16,250 $113,750 $3,038,750

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. Prepare the journal entries to record interest expense for 2022 under both of the bond issuances assuming they sold at: (1) 101 and (2) 95.

2.Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 101 at December 31, 2022

3. Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 95 at December 31, 2022.

journal entry
Date	Account titles & explanations	Debit	Credit
1-Jan-22	Cash($3,250,000 *1.01)	$3282500
	Premium on bonds		$32,500
	Bonds payable		$3,250,000
	(Being bonds issued at premium)

1-Jan-22	Cash(3,250,000 *0.95)	$3087500
	Discount on bonds	$162,500
	Bonds payable		$3,250,000
	(Being bonds issued at discount)

Step 2

Amortization table for issue of bonds 101
Period	Interest	Interest	Premium	Unamortized	Bonds
	Paid	Expense	amortization	premium	Carrying value
				$32,500	$3282500
1	$292,500	$289,250	$3,250	$29,250	$3,279,250
2	$292,500	$289,250	$3,250	$26,000	$3,276,000
3	$292,500	$289,250	$3,250	$22,750	$3,272,750

Amortization table for issue of bonds 95
Period	Interest	Interest	Discount	Unamortized	Bonds
	Paid	Expense	amortization	Discount	Carrying value
				$162,500	$3087500
1	$292,500	$276,250	$16,250	$146,250	$3,071,250
2	$292,500	$276,250	$16,250	$130,000	$3,055,000
3	$292,500	$276,250	$16,250	$113,750	$3,038,750

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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