Question
(i)On 1 st September 2015, Motiwala Corporation issued 9% Bonds Payable for Rs. 10,000,000 at 5% discount. Six-monthly interest is payable on 1 st March
(i)On 1st September 2015, Motiwala Corporation issued 9% Bonds Payable for Rs. 10,000,000 at 5% discount. Six-monthly interest is payable on 1stMarch and 1st September. Bonds Payable will mature after 10 years i.e.on 1st September 2025.
Pass journal entries:
1 Sep 2015 Issue of 9% Bonds Payable at 5% discount.
31 Dec 2015Accrual of interest and discount amortization.
1 Mar 2016Payment of bi-annual interest and discount amortization.
1 Sep 2016Payment of bi-annual interest and discount amortization.
31 Dec 2016Accrual of interest and discount amortization.
1 Mar 2017Payment of bi-annual interest and discount amortization.
(ii)What are the factors determining difference between market value of bond payable and par value
(issue price) of bond payable?
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