Question

Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate comple On January 1, Renewable Energy issues bonds that have a $30,000 par value, mature in six years, and pay 14% interest semiannually on June 30 and December 31. 1. Prepare the journal entry for issuance assuming the bonds are issued at a 99 and (6) 103 2. How much interest does the company pay (in cash) to its bondholders every six months of the bonds are sold at par? Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 103. No Debit Credit Date Jan 01 General Journal Cash Discount on bonds payable Bonds payable 29,700 300 30.000 < Prev 21 of 27 !!! Next > earch

Answer 1

Solution:

1(a) When Bonds are issued at $99

Jan 1 June 30 Dec 31

Cash       A/c                                               Dr. Discount on Bonds Payable A/c                           Dr.          To Bonds Payable A/c Bonds interest expense A/c                                Dr.          To Discount on Bonds Payable A/c ($300 /12)          To Cash A/c Bonds interest expense A/c                                Dr.          To Discount on Bonds Payable A/c ($300 /12)          To Cash A/c

29,700 300 2,125 2,125

30,000 25 2,100 25 2,100

1(b) When Bonds are issued at $103.5

Jan 1 June 30 Dec 31

Cash       A/c                                      Dr.          To Bonds Payable A/c          To Premium on Bonds Payable A/c Bonds interest expense A/c                                Dr. Premium on Bonds Payable A/c                         Dr.          To Cash A/c Bonds interest expense A/c                                Dr. Premium on Bonds Payable A/c                         Dr.          To Cash A/c

31,050 2,012.5 87.5 2,012.5 87.5

30,000 1,050 2,100 2,100

2. Interest on bonds payable at every six months = $30,000 * 14% * 6/12

                                                                          = $2,100