[accttutor18]

Can someone please explain how to calculate the following? The journal entries below are correct but I keep getting the calculation wrong. Can I see the actual calculate of JE Jan 1?

Ratzlaff Company issues $2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.

Prepare the journal entry to record the sale of these bonds on January 1, 2008. (List multiple debit/credit entries in descending order of amount.)
Date Description/Account Debit Credit
Jan. 1 Cash
Discount on bonds payable
Bonds payable







Incorrect.

Assuming instead that the above bonds sold for 104, prepare the journal entry to record the sale of these bonds on January 1, 2008. (List multiple debit/credit entries in descending order of amount.)
Date Description/Account Debit Credit
Jan. 1 Cash
Bonds payable
Premium on bonds payable

[morgaine300]

Were these accounts given in some type of template or did you fill them in yourself? Because it's requesting you list in order or descending amount, and because the one says "incorrect" at the bottom, that's somewhat indicating to me that you filled in these accounts yourself.

And you have no dollars amounts, so that makes them incorrect because they're incomplete.

The 97 and the 104 mean 97% and 104% of the bond face value. So that's how you figure out how much they were issued for. The bond payable ALWAYS must be at face value. The difference of course is the premium or discount.