Question

M10-10 Computing and Reporting a Bond Liability at an Issuance Price of 102 [LO 10-3] E-Tech Initiatives Limited plans to issue $500,000, 10-year, 4 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 102.

Answer 1

Step-by-step explanation:

Balance sheet presentation :

Long term liabilties

Bonds payable 500000

Add: Premium on bonds payable 10000

Carrying value of bonds 510000