On June 30, 2021, Macias SA issued R$5,000,000 face value of 13%, 20-year bonds at R$5,376,150 to
Question:
On June 30, 2021, Macias SA issued R$5,000,000 face value of 13%, 20-year bonds at R$5,376,150 to yield 12%. The bonds pay semiannual interest on June 30 and December 31.
Instructions
a. Prepare the journal entries to record the following transactions.
1. The issuance of the bonds on June 30, 2021.
2. The payment of interest and the amortization of the premium on December 31, 2021.
3. The payment of interest and the amortization of the premium on June 30, 2022.
4. The payment of interest and the amortization of the premium on December 31, 2022.
b. Show the proper statement of financial position presentation for the liability for bonds payable on the December 31, 2022, statement of financial position.
c. Provide the answers to the following questions.
1. What amount of interest expense is reported for 2022?
2. Determine the total cost of borrowing over the life of the bond.
Step by Step Answer:
a 1 Issuance of Bonds on June 30 2021 Cash Dr 100000 assuming face value of bond is 100000 Premium on Bonds Payable Cr 2000 Bonds Payable Cr 98000 Explanation The company issued bonds with a face valu...View the full answer
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
