Garcia Company issues 10.0%, 15-year bonds with a par value of $330,000 and semiannual interest payments....
Garcia Company issues 10.0%, 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 8.0%, which implies a selling
price of 119 1/2.
Prepare the journal entry for the issuance of these bonds for cash
on January 1.
Homework Answers
| Date | Account titles and explanation | Debit | Credit |
| January 1 | Cash ($330000/100*119.50) | $394350 | |
| Bonds payable | $330000 | ||
| Premium on bonds payable (394350-330000) | $64350 | ||
| (To record issuance of bonds) | |||
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