Holloway Corporation issued 8%, 10-year bonds with a face value of $2,000,000 at a price of 96

Question:

Holloway Corporation issued 8%, 10-year bonds with a face value of $2,000,000 at a price of 96 on July 1, 2018. The bonds pay interest each January 1 and July 1. Holloway uses the straight-line amortization method for all bond premiums and discounts. The company has a fiscal year-end of December 31.

Requirements

1. Record the issuance of the bonds on July 1, 2018.

2. Record the accrual for the cash interest payable on the bonds and the amortization of any premium or discount on the bonds on December 31, 2018.

3. Show how the accounts related to the bonds issued on July 1, 2018, would be reported on Holloway’s balance sheet as of December 31, 2018.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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