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Brown Deer Electric

Price: $2.50


Brown Deer Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2012. The bonds
were dated January 1 and pay interest July 1 and January 1. Brown Deer Electric uses the straightline
method to amortize bond premium or discount. The bonds were sold at 104. Assume no interest
is accrued on June 30.

Instructions
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2012.
(b) Prepare a bond premium amortization schedule for the first 4 interest periods.
(c) Prepare the journal entries for interest and the amortization of the premium in 2012 and
2013.
(d) Show the balance sheet presentation of the bond liability at December 31, 2013

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