Question
In: Accounting
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.)
Solutions
Expert Solution
Solution
| Date | Account Title and Explanation | Debit | Credit |
| June 30 | Bond interest expense | $ 33,517 | |
| Premium on bonds payable | $ 1,583 | ||
| Cash | $ 35,100 | ||
| (Interest on bond paid and Discount amortized) |
Working
| Bond issue price | $ 405,830.00 |
| Face value | $ 390,000.00 |
| Premium on bonds payable | $ 15,830.00 |
| Number of Interest payments (5 years x 2) | 10 |
| Discount/ premium to be amortized per Half year | $ 1,583.00 |
| Cash Interest on bond (390000 x 9%) | $ 35,100.00 |
| Interest expense to be recorded (35100-1583) | $ 33,517.00 |
ekkarill92 answered 1 year agoRelated Solutions
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 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.)
1. On January 1, a company issues bonds dated January 1 with a par value of...
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On January 1, a company issues bonds dated January 1 with a par value of $300,000....
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