Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Tarawa Limited issued $720,000 of 10-year, 5% bonds on January 1, 2018, when the market interest rate was 6%. Tarawa received $666,444 when the bonds
Tarawa Limited issued $720,000 of 10-year, 5% bonds on January 1, 2018, when the market interest rate was 6%. Tarawa received $666,444 when the bonds were issued. Interest is payable semi-annually on July 1 and January 1. Tarawa has a December 31 year end. Record the issue of the bonds on January 1. (Credit account titles are automatically Indented when the amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit Cash Jan. 1 666464 668 Bonds Payable Record the payment of interest on July 1. (Round answers to decimal places, eg. 5,275. Credit account titles are automatically Indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 Interest Expense 18000 Bonds Payable Cash Prove the amount of cash received when the bonds were sold by determining the bonds present value (issue price) on January 1,2018. Prove the carrying amount of the bonds, one year later, by determining the present value of the bonds at that time: (Round answers to decimal places, e.g. 5,275.) Bonds' present value (issue price) on January 1, 2018 $ Present value of the bonds
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started