Thompson Distributors sold $50,000 worth of bonds to raise money for a new warehouse. The bonds pay interest annually at 4% for 10 years. The market rate of interest for a similar instrument was 3%; therefore, the bonds sold for a premium at $54,265. a. Record the sale of the bonds. b. Record the first interest payment and the amortization of the bond premium. Round the interest to the nearest dollar. c. Determine the carrying value (book value) of the bonds after the first year. General Journal DateAccount Debit Credit a. b.

Introduction: A bond is a fixed payment obligation issued by corporations or government entities to…

Answered: Thompson Distributors sold $50,000…

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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	Thompson Distributors sold $50,000 worth of bonds to raise money for a new warehouse.
	The bonds pay interest annually at 4% for 10 years. The market rate of interest for a similar instrument
	was 3%; therefore, the bonds sold for a premium at $54,265.

	a. Record the sale of the bonds.

	b. Record the first interest payment and the amortization of the bond premium. Round the interest
	to the nearest dollar.

	c. Determine the carrying value (book value) of the bonds after the first year.


	General Journal
Date	Account	Debit	Credit

a.




b.

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