Please type the answer. Dont take the picture. B. On January 1,2011, New York Ya
ID: 2598154 • Letter: P
Question
Please type the answer. Dont take the picture.
B. On January 1,2011, New York Yankees Co. sold a $1,400,000, 8 percent bond issue (6 percent market rate). The bonds were dated January 1,2011, pay interest each June 30 and December 31 and mature in four years? Required: I. Give the journal entry to record the issuance of the bonds. 2. Give the journal entry to record the interest payment on June 30 2011. Use effective interest method of amortization. 3. Show how the bond interest expense and the bonds payable should be reported on the December 31,2011 balance sheet and income statement.Explanation / Answer
Solution:-
1.
Computation:-
2.
3.
Cash flow statement:-
Interest payment reduces CFO. (In this class, that’s all we need to know. No need to adjust for difference between interest expense and cash coupon payment.)
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Date Account titles and explanation Debit Credit January 1, 2011 Cash 1,498,263 Premium on bonds payable 98,263 Bonds payable 1,400,000