Crane Company issues $365,000, 20-year, 8% bonds at 103. Prepare the journal entry to record the sale of these bonds on June 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Crane Company

Journal entry to record the sale of the bonds on June 1, 2022:

Debit Cash Account $375,950

Credit Bonds Payable $365,000

Credit Bonds Premium $10,950

To record the sale of 8% bonds at 103.

Explanation:

a) Data and Calculations:

Face value of bonds = $365,000

Bonds maturity period = 20 years

Bonds issued at a premium of 103

Bonds rate of interest = 8% per annum

Number of bonds issued = $365,000/$100 = 3,650

Premium on bonds = 3,650 * $3 ($103 - $100) = $10,950