Question
OhSoPoor, Inc (OSP) was exceptionally short on cash during 2019 and issued a series of loans to cover their cash shortfall. The market rate of
OhSoPoor, Inc (OSP) was exceptionally short on cash during 2019 and issued a series of loans to cover their cash shortfall. The market rate of interest for all the bonds was 5%. For each bond, record the journal entry following transactions:
(a) Theissuanceofthebond. (b) Thefirstinterestpaymentafterissuanceofthebond. (c) TheinterestpaymentoraccrualatDecember31,2019.
Bond A: This is a zero-interest, $100,000 bond which matures in 5 years and is issued on January 1, 2019.
Bond B: This bond is a 15-year, $500,000 bond which pays interest at 6%. This bond was issued on February 1, 2019 and pays interest on June 30, and December 31 of each year.
Bond C: This is a 10-year, 4%, $200,000 bond. This bond was issued on April 1, 2019 and pays interest on March 31 and September 30 of each year.
Bond D: This is a 7.5 year, 8% bond with a maturity value of $400,000. The bond pays interest at the end of every calendar quarter. This bond was issued on July 1, 2019.
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