Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sonic Drive - Ins Ltd . borrowed money by issuing $ 2 , 5 0 0 , 0 0 0 of 8 % bonds payable

Sonic Drive-Ins Ltd. borrowed money by issuing $2,500,000 of 8% bonds payable at 94.5 on July 1,2021. The bonds are 10-year bonds and pay interest each January 1 and July 1.
Read the requirements.
How much cash did Sonic receive when it issued the bonds payable? Journalize this transaction.
When the bonds payable were issued, Sonic received
$ 2,362,500
Journalize the issuance of the bonds payable. (Record debits first, then credits. Exclude explanations from any journal entries.)
Journal Entry
\table[[Date,Accounts,Debit,Credit],[Jul,Cash,2,362,500,],[,,,],[,,,],[,,,]]
Requirements
How much cash did Sonic receive when it issued the bonds payable? Journalize this transaction.
How much must Sonic pay back at maturity? When is the maturity date?
How much cash interest will Sonic pay each six months?
How much interest expense will Sonic report each six months? Use the straight-line amortization method. Journalize the entries for the accrual of interest and amortization of discount on December 31,2021, and the payment of interest on January 1,2022.

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

Managerial Accounting For Undergraduates

Authors: James Wallace, Scott Hobson, Theodore Christensen

2nd Edition

1618533096, 9781618533098

More Books

Students also viewed these Accounting questions

Question

5 What does it mean to think of an organisation as an open system?

Answered: 1 week ago