Saberhagen Company sold $3,500,000, 8%, 10-year bonds on January 1, 2020. The bonds were dated January 1,

Question:

Saberhagen Company sold $3,500,000, 8%, 10-year bonds on January 1, 2020. The bonds were dated January 1, 2020 and pay interest annually on January 1. Saberhagen Company uses the straight-line method to amortize bond premium or discount.

Instructions
a. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2020, assuming that the bonds sold at 104.
b. Prepare journal entries as in part (a) assuming that the bonds sold at 98.
c. Show the balance sheet presentation for the bonds at December 31, 2020, for both the requirements in (a) and (b).

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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