Question

On december 1, 2015, spearmint, inc., issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

Step-by-step explanation:

The journal entry is as follows:

Cash A/c Dr $461,795

To Premium on bond payable A/c $11,795

To Bond payable A/c $450,000

(Being the bond is issued)

The computation is shown below:

= Cash account - bond payable

= $461,975 - $450,000

= $11,795

Since the cash is received is higher than the bond payable so the difference would be a premium earned on a bond payable