Question

In: Accounting

On January 1, a company issues bonds dated January 1 with a par value of $380,000....

On January 1, a company issues bonds dated January 1 with a par value of $380,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $396,210. The journal entry to record the issuance of the bond is:

Multiple Choice

  • Debit Cash $380,000; debit Premium on Bonds Payable $16,210; credit Bonds Payable $396,210.

  • Debit Cash $396,210; credit Discount on Bonds Payable $16,210; credit Bonds Payable $380,000.

  • Debit Cash $396,210; credit Bonds Payable $396,210.

  • Debit Cash $396,210; credit Premium on Bonds Payable $16,210; credit Bonds Payable $380,000.

  • Debit Bonds Payable $380,000; debit Bond Interest Expense $16,210; credit Cash $396,210.

Solutions

Expert Solution

Debit Cash $396210, Credit Premium on bonds payable $16210 and Credit Bonds payable $380000
Workings:
Account Titles and Explanation Debit Credit
Cash $       3,96,210
Bonds payable $       3,80,000
Premium on bonds payable $           16,210

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

1. On January 1, a company issues bonds dated January 1 with a par value of...
1. On January 1, a company issues bonds dated January 1 with a par value of $260,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $271,091. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.) Multiple Choice Debit Bond Interest Expense $10,209; credit Discount on Bonds...
On January 1, a company issues bonds dated January 1 with a par value of $330,000....
On January 1, a company issues bonds dated January 1 with a par value of $330,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $317,254. The journal entry to record the issuance of the bond is: Multiple Choice Debit Cash $317,254; debit Discount on Bonds Payable $12,746; credit Bonds Payable $330,000. Debit Cash $330,000; credit...
On January 1, a company issues bonds dated January 1 with a par value of $400,000....
On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the issuance of the bond is: a. Debit Cash $383,793; debit Discount on Bonds Payable $16,207; credit Bonds Payable $400,000. b. Debit Bonds Payable $400,000;...
On January 1, a company issues bonds dated January 1 with a par value of $390,000....
On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the first interest payment using the effective interest method of amortization is: (Rounded to the nearest dollar.) a. Debit Bond Interest Expense 19,133.00; credit Premium...
On January 1, a company issues bonds dated January 1, 2018 with a par value of...
On January 1, a company issues bonds dated January 1, 2018 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid annually on December 31. The bonds are sold for $312,200. The journal entry to record the first interest payment using straight-line amortization is: Muheet Corporation issues $550,000, 10%, 5-year bonds on January 1, 2019 for $489,000. Interest is paid annually on January 1. If Muheet Corporation uses the...
On January 1, a company issues bonds dated January 1 with a par value of $770,000....
On January 1, a company issues bonds dated January 1 with a par value of $770,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $761,000. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Payable $30,800; credit Cash $30,800. Debit Interest Expense $30,800; credit Cash $30,800. Debit Interest Expense $32,300; credit Discount on...
On January 1, a company issues bonds dated January 1 with a par value of $300,000....
On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $288,413. The journal entry to record the first interest payment using the effective interest method of amortization is: A) Debit Interest Expense $12,579; debit Discount on Bonds Payable $921; credit Cash...
12. On January 1, a company issues bonds dated January 1 with a par value of...
12. On January 1, a company issues bonds dated January 1 with a par value of $740,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $719,000. The journal entry to record the first interest payment using straight-line amortization is: 16. On January 1, a company issues bonds dated January 1 with a par value of $330,000. The bonds mature in 5...
On January 1, a company issues bonds dated January 1 with a par value of $390,000....
On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
On January 1, a company issues bonds dated January 1 with a par value of $390,000....
On January 1, a company issues bonds dated January 1 with a par value of $390,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $405,830. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT