On March 1, 2021, Jade Corp. issued $200,000 of 7%, 5-year unsecured bonds at face value. The

Question:

On March 1, 2021, Jade Corp. issued $200,000 of 7%, 5-year unsecured bonds at face value. The bonds were dated March 1, 2021, and pay interest semi-annually on March 1 and September

1. Financial statements are prepared annually on June 30.

Instructions

a. Is this a debenture bond? Why or why not?

b. Prepare the journal entry to record the issuance of the bonds.

c. Prepare the adjusting entry to record the accrual of interest on June 30, 2021. Round amounts to the nearest dollar.

d. Show the balance sheet presentation at June 30, 2021.

e. Prepare the journal entry to record the payment of interest on September 1, 2021, assuming Jade does not use reversing entries.

f. Prepare the journal entry to record the payment of interest on March 1, 2022.

Taking It Further

As a source of long-term financing, what are the major advantages of issuing debt instead of issuing shares? What are the disadvantages?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... 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...

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