Bond liability and the related accounts

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On December 31, 2003, Sloan Corporation issued $1,000,000, 10%, 5-year bonds for $700,000. The par value of each bond is $1,000. The stated interest rate on the bond is 10% payable annually on December 31 of each year, beginning December 31, 2004. The bonds will mature 5 years from the date of issue (December 31, 2008).

(a) Provide the journal entry to record the issuance of the bonds. Show computations.

(b) Provide the journal entry that Sloan should make on December 31, 2004, assuming straight line amortization.

(c) Show how the bond liability and the related accounts will appear on the Balance Sheet of Sloan on December 31, 2004.

Reference no: EM13146769

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