Question 7 of 7 M1011 Recording Bonds Issued at Face Value L

Question 7 (of 7) M10-11 Recording Bonds Issued at Face Value [Lo 10-3] [The following information applies to the questions displayed below] wite rside Ceompany isued 34 000. 10-year. 7 percent. 5100 bonds on January1 at face value. Company issued 3 Interest is payable each December 31. (a) The Issuance of these bonds on January 1 (b) The first interest payment on December 31. References vmoll Recordng Bonds issued at Face 0.74 points

Solution

Assets = Liabilities + Shareholder\'s equity a. Cash +3400000 Bonds payable +3400000 No effect NE b. Cash - 238000 No effect NE Interest expense -238000 * interest expense : $3400000 × 7% ×12/12= $238000 Date General Journal Debit Credit Jan 1, 2013 Cash 3400000 Bonds payable 3400000 Dec 31, 2013 Interest expense 238000 Cash 238000