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Ace Brick company issued $100,000 of 5-year bonds. The bonds were issued at par on January 1, 20X1, and bear interest at a rate of
Ace Brick company issued $100,000 of 5-year bonds. The bonds were issued at par on January 1, 20X1, and bear interest at a rate of 8% per annum, payable semiannually.
(d) How much cash flowed "in" and "out" on this bond issued, and how does the difference compare to total interest expense that was recognized?
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Ace Brick company issued $100,000 of 5-year bonds. The bonds were issued at par on January 1, 20X1, and bear interest at a rate of 8% per annum, payable semiannually. (a) Prepare the journal entry to record the bond issue on January, 20X1. (b) Prepare the journal entry that Ace would record on each interest date. (c) Prepare the journal entry that Ace would record at maturity of the bonds. (d) How much cash flowed "in" and "out" on this bond issued, and how does the difference compare to total interest expense that was recognized? (a)(b)(c) GENERAL JOURNAL Date Issue Accounts Cash Debit Credit 100,000 Bonds Payable 100,000 To record the issuance of 100,000, 8%, 5-year bonds at par (100,000 X 1,000 each) Interest Interest Expense 4,000 Cash 4,000 To record interest payment (this entry occurs on every interest payment date at 6 month intervals $100,000 X 8% X 6/12) Maturity Bonds Payable Cash To record payment of face value at maturity (d) 100,000 100,000Step by Step Solution
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