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Table 4 Browning Enterprises is considering alternative ways of raising capital for the purchase of a new plant. One alternative suggested by the controller is
Table
Browning Enterprises is considering alternative ways of raising
capital for the purchase of a new plant. One alternative
suggested by the controller is the issuance of bonds. After
discussions with an underwriter, Browning decides to issue
$ of year bonds dated May with
interest payment dates of November and May Browning's
yearend is December Browning uses the effectiveinterest
method of amortization.
Refer to Table Assume the bonds were issued on May X
at when the market interest rate was and the company
uses the effectiveinterest method of amortization. The December
X adjusting entry to accrue interest and record applicable
amortization would include a
credit to premium on bonds payable for $
debit to interest expense for $
debit to bonds payable for $
credit to discount on bonds payable for $
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