Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Take me to the text A company is issuing $330,000 worth of 5-year bonds on August 14, 2020, bearing an interest rate of 4%, payable

image text in transcribed
image text in transcribed
Take me to the text A company is issuing $330,000 worth of 5-year bonds on August 14, 2020, bearing an interest rate of 4%, payable annually. Assume that the current market rate of interest is 79 a) Will the bonds be issued at a discount or at a premium? b) Calculate the value of the resulting discount or premium C) Record the journal entry to reflect the sale of bonds and the appropriate discount or premium. Note that the present value factor for the principal is 0.7130 (7%, 5-years) and that the present value factor for the recurring interest payment is 4.1002 (7%, 5-years). Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number Enter the debit accounts in alphabetical order as aplicable. Enter all credit accounts in alphabetical order as applicable The bonds are issued at a: Discount Discount or premium amount: $ Date Account Title and Explanation Debit 1 Credit Aug 14 Cash Discount on Bonds Payable Bonds Payable 330000 issue of bonds at discount or premium Take me to the text On April 30, 2020, a company issued $570,000 worth of 8% bonds at par. The term of the bonds is 5 years, with interest payable semi- annually on October 31 and April 30. The year-end of the company is November 30. Record the journal entries related to interest for 2020 and 2021. Note that interest must be accrued at the end of each year, Do not enter dollar signs or commas in the input boxes Round your answers to the nearest whole dollar. For transactions with more than one debit enter the debit accounts in alphabetical order. Debit Credit Date Oct 31, Account Title and Explanation Interest Expense 2020 Cash Payment of bond interest Nov 30, 2020 Interest Expense Interest Payable Accrued interest on bonds at year-end Apr 30, 2021 Interest Expense Interest Payable Cash Payment of bond interest Oct 31, 2021 Interest Expense Cash Payment of bond interest Nov 30, 2021 Interest Expense Interest Payable Accrued interest on bonds at year-end

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

Government And Not For Profit Accounting Concepts And Practices

Authors: Michael H. Granof, Saleha B. Khumawala, Thad D. Calabrese

9th Edition

1119803896, 978-1119803898

More Books

Students also viewed these Accounting questions