Kershaw Electric sold $6,000,000, 10%, 10-year bonds on January 1, 2019. The bonds were dated January 1, 2019, and paid interest on January 1. The bonds were sold at 98.

A. Jan. 1, 2019

Dr Cash 5,880,000

Cr Discount on bonds payable 120,000

Cr Bonds payable 6,000,000

B. $5,888,000

C. Jan. 1, 2019

Dr Bonds Payable6,000,000

Dr Loss on Redemption 224,000

Cr Discount on Bonds Payable 104,000

Cr Cash 6,120,000

Explanation:

A.Preparation of the journal entry to record the issuance of the bonds on January 1, 2019

Jan. 1, 2019

Dr Cash 5,880,000

(98%*6,000,000)

Cr Discount on bonds payable 120,000

(2%*6,000,000)

Cr Bonds payable 6,000,000

(To record issue bonds payable)

B. Preparation of the balance sheet presentation of the long-term liability

Balance Sheet December 31, 2019

Long-term liabilities

Bonds payable6,000,000

Less: Discount on bonds payable 112,000

(120,000-8,000)

Long-term liabilities$5,888,000

C. Preparation of the Journal entry to record the redemption of the bonds

Jan. 1, 2019

Dr Bonds Payable6,000,000

Dr Loss on Redemption 224,000

(6,120,000-5,896,000)

Cr Discount on Bonds Payable 104,000

(6,000,000-5,896,000)

Cr Cash 6,120,000

(6,000,000*102%)

(To record redemption of bonds)

answer$225.00;

answer(b) equal; set period;