Prepare the journal entry for the issuance of the bonds. Assume the bonds are is
ID: 2545914 • Letter: P
Question
Prepare the journal entry for the issuance of the bonds. Assume the bonds are issued for cash on January 1, 2017.
Enviro Company issues 10%, 10-year bonds with a par value of $300,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2.
Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017.
Garcia Company issues 10.00%, 15-year bonds with a par value of $330,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8.00%, which implies a selling price of 119 1/2.
Explanation / Answer
Solution:(1): Following is the required journal entry:
Cash A/C Debit. $265,500
Discount on Bonds Payable A/C Debit. $34,500
Bonds Payable A/C Credit. $300,000
Solution:(2): Following is the required journal entry:
Cash A/C Debit. $394,350
Premium on Bonds Payable A/C Credit. $64,350
Bonds Payable A/C. Credit. $330,000