Bonds Issued at a Discount (Alternates are 9-52 and 9-55.) On January 1, 2004, Metro Transit issued
Question:
Bonds Issued at a Discount (Alternates are 9-52 and 9-55.) On January 1, 2004, Metro Transit issued $10 million of 5-year, 6% debentures. The market interest rate at issuance was 8%. 1. Compute the proceeds from issuing the debentures. 2. By using the balance sheet equation format, prepare an analysis of this bond transaction. Show entries for the issuer concerning
(a) issuance,
(b) first semiannual interest payment, and
(c) pay- ment of maturity value. Round to the nearest thousand. 3. Show the corresponding journal entries for (a), (b), and
(c) in requirement 2. 4. Show how the bond-related accounts would appear on the balance sheets as of January 1, 2004 and July 1, 2004. Assume Metro Transit has already recorded the semiannual interest payment and amortization due on the balance sheet dates.
Step by Step Answer:
Introduction To Financial Accounting
ISBN: 0131479725
9th Edition
Authors: Charles T Horngren, John A Elliott