eBook Show Me How Calculator Entries for Issuing Bonds and A

eBook Show Me How Calculator Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method on the fir improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 8% resulting in din receiving ash of $9,594,415 st day of its fiscal year, Cin Company issued $10,000,000 of five-year, 7% bonds to finance its operations of producing and selling home a Journalize the entries to record the following: --1. Issuance of the bonds. nuat Interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3Second semiannual interest payment. The bond discount is combir.ad with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round you answers to the nearest dollar. 1. Cash 9.594415 Discount on Bonds Payable 405.585 Bonds Payable 10,000,000 . Interest Expense 3905.50x Dscount on Bonds Payable Cash 40,558.5 X 350,000 390.558.5X a Interest Expense 40.5 Discount on Bonds Payable Previous Next Check My Work 3-44 PM ]

Solution

a.]

b.] Interest expense for the first year = 390559  + 390559

= $781118

Date	Accounts	Dr.	Cr.
1.	Cash	9594415
	Discount on Bonds payable	405585
	To Bonds payable		10000000
2.	Interest expense	390559
	To Discount on Bonds payable [405585 / 10]		40559
	To cash [10000000 * 7%/2]		350000
	Note:- Amortisation as per straight line
	Number of periods = 2 * 5 years = 10
3.	Interest expense	390559
	To Discount on Bonds payable		40559
	To cash [10000000 * 7%/2]		350000