P11-4A Kusmaul Electric sold $500,000, 10%, 10-year bonds on January 1, 2008. The bonds

Price: $2.50


Kusmaul Electric sold $500,000, 10%, 10-year bonds on January 1, 2008. The bonds
were dated January 1 and paid interest on January 1 and July 1.The bonds were sold at 104.

Instructions
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2008.
(b) At December 31, 2008, the balance in the Premium on Bonds Payable account is $18,000.
Show the balance sheet presentation of accrued interest and the bond liability at December
31, 2008.
(c) On January 1, 2010, when the carrying value of the bonds was $516,000, the company redeemed
the bonds at 105. Record the redemption of the bonds assuming that interest for the
period has already been paid.