Prepare the journal entries

1. How does the entry to record the issuance of a bond at a premium differ from a bond issued at a discount?

2. How should a company report a premium on bonds payable on its balance sheet?

3. What constitutes the carrying value of a noninterest-bearing note?

1. What constitutes the carrying value of a bond?

2. Explain why and how the Premium and Discount on Bonds Payable affect interest expense.

3. Describe the difference in cash flows between two identical bonds when one is issued at a discount and the other is issued at a premium.

Doherty, Inc., is authorized to issue 1,000,000 shares of $1 par value common stock and 400,000 shares of $100 par preferred stock. Prepare the journal entries to record the sale of 10,000 shares of common stock at $9 and 200 shares of preferred stock at $103 per share.

Solution:

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