Answer:
The Journal entry is as follows:
On June 1, 2022
Cash A/c Dr. $316,200
To Bonds payable A/c $310,000
To Premium on Bonds Payable A/c $6,200
(To record the sale of these bonds on June 1, 2022)
Workings:
cash = $310,000 × (102 ÷ 100)
= $310,000 × 1.02
= $316,200
Premium on Bonds Payable = $316,200 - $310,000
= $6,200
Answer:
June 1st 2022
Dr Cash 316,200
Cr Bond Payable 310,000
Cr Premium on Bond payable 6,200
( to record bond issuance)
Explanation:
As at issuance, we have:
+ Cash receipt from bond issuance = 310,000 x 102% = $316,200. So, Cash account goes up (Dr) by $316,200 to reflect the change.
+ Bond payable record at the par-value of total bonds issued or $310,000. So, Bond Payable goes up (Cr) by $310,000 to record the bond liability.
+ As bond is issued at premium ( at 102); a Premium on Bond account is credited at the amount of $6,200; which is decided is the different between the amount debit to cash account and the amount credit to bond payable account ( 316,200 - 310,000).
