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Romero issues 3,400,000 of 10%, 10 year bonds dated January 1 20133 that pay interest semiannually on June 30 and December 31. The bonds are
Romero issues 3,400,000 of 10%, 10 year bonds dated January 1 20133 that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of 3,010,000.
1. Prepare the January 1 2013 journal entry to record the bonds issuance.
2. for each semiannual period, compute (a) the cash payment, (b) the straight line discount amortization, and (c) the bond interest expense.
ANSWER THE QUESTION IN THE FOLLOWING FORMAT: # 1. Bond Issuance: | ||||
Debit | Credit | |||
Cash | 3,010,000 | |||
Discount on Bonds Payable | 390,000 | |||
Bond Payable | 3,400,000 | |||
Interest computatuions in accordance with Exhibit 14.7 in textbook | ||||
# 2. Each semi-annual period: | ||||
10% | ||||
Interest Expense | ||||
Discount on Bonds Payable | ||||
Cash | ||||
#3. Total bond interest expense recognized over bond's life= |
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