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.

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.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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	General Journal
Date	Account	Debit	Credit

a.




b.

	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.