Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Help me solve please the ones that have an X Par, Premium, and Discount The discount or premium on bonds payable is recorded in a

Help me solve please the ones that have an X image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Par, Premium, and Discount The discount or premium on bonds payable is recorded in a separate account whose balance is combined with bonds payable on the financial statement. Since the normal balance for a discount is a debit, it will be deducted from the value of the bonds payable. Alternatively, a premium's normal balance is a credit and will be added to the bonds payable 1. Assume that 8% bonds with a face value of $100,000, due on December 31, 2030, were issued on December 31, 2010. Click on each selling price to see how the selling price affects the journal entry and the balance sheet presentation on the issue date. Selling Price $90,000 $100,000 $110,000 2. York Inc. issued bonds on January 1, 2012, that had a two year maturity. The bonds had a face value of s149,000 and a contract rate of interest of 8%, which is paid semiannually on June 30 and December 31. a. Assume that the bond's market rate of interest is 13%, and its current selling price is $136,238. The selling price of the bond is less than the face value of the bonds, which means that these bonds were issued at a discount When the bond is recorded in the journal, Discount on Bonds Payable should be debited for The discount will be amortized over the life of the bonds. b. Assume that the bond's market rate of interest is 6%, and its current selling price is $154,539. What entry is recorded with the bond issuance? Dr Cash $154539 Cr Premium on Bonds Payable S5539 cr Bonds Payable $149000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

New Principles Of Best Practice In Clinical Audit

Authors: Robin Burgess

2nd Edition

1138443646, 978-1138443648

More Books

Students also viewed these Accounting questions