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Homework answers / question archive / On January 1, 2021, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102
On January 1, 2021, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2021 is
| Date | Accounts Titles and Explanation | Debit ($) | Credit ($) |
| Jan 1, 2020 | Cash | 5,100,000 | |
| Premium on Bonds Payable | 100,000 | ||
| Bonds Payable | 5,000,000 | ||
| (To record issue of bonds) |
Notes
Cash received on bond issue = 5,000,000 x 102% = 5,100,000
Therefore, premium on bonds = 5,100,000 - 5,000,000 = 100,000
