Answer:
Dr. Cr.
February 1, 2020
Cash $26,700
Bond Premium $9,700
Bond Payable $17,000
Step-by-step explanation:
Any amount paid / received over the face value of the bond is called premium of bond. It is due to that the stated interest rate of bond is higher than the market rate.
Face value of bond = 3,400 x $5 = $17,000
Premium on bond = $26,700 - $17,000 = $9,700
Cash received will be debited to cash account. Bond payable is a liabilities. Bond premium is also a liability account which will amortize over the bond life and reduce the interest payable amount of each period.