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Unformatted text preview: Cash received from bond issue is greater than face value Issuing Bonds at a Premium Suppose a company issues $100,000 of 9%, five-year bonds when the market interest rate is 8% The market price of the bonds is $104,100 Date Accounts Debit Credit 1-Jan Cash $104,100 Premium on Bonds Payable _______ Bonds payable $100,000 Carrying Amount: Bonds Issued at a Premium Bonds are shown at their carrying amount on the balance sheet Carrying amount = Face value Plus Premium Balance Balance Sheet January 1 Long-Term Liabilities: Bonds Payable $100,000 Plus: Premium $ 4,100 $104,100...
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- Spring '08
- Financial Accounting