Question

When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the debt offerings reported in December 2021 New Securities Issues Cerperate National Equipment Transfer Corporation $211 million bonds via lead managers Second Tennessee Bank N.A. and Morgan, Dunavant & Co., according to a syndicate official. Terest maturity, Dec. 15, 2010, coupon 7.59 issue price, par, yield, 7.59%; noncallable; debt ratings Bai (Moody's Investors Service, Inc. ). . (Standard & Poor's) Igg Inc.-$363 million of notes via lead manager Stanley Brothers, Inc., according to syndicate official. Terasi maturity, Dec. 1, 2012; coupon, 6.34%; Issue price, 99; yield, 6.44; call date, NC debt ratings: Baa. (Moody's Investors Service, Inc.). A (Standard & Poor's). Required: 1. Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs and assume no accrued interest 2. Prepare the appropriate journal entries to record the first semiannual interest payment for both issues. Complete this question by entering your answers in the tabs below. o te

Answer 1

Part 1

Event	General journal	Debit	Credit
1	Cash	213000000
	Bonds payable		213000000
	(to record the sale of nation equipment transfer corporation to underwriters)
2	Cash (363000000*99%)	359370000
	Discounts on notes payable	3630000
	Notes payable		363000000
	(to record the sale of IgWig, Inc to underwriters)

Part 2

Event	General journal	Debit	Credit
1	Interest expense (213000000*7.59%/2)	8083350
	Cash		8083350
	(to record the first semiannual payment for national equipment transfer corporation)
2	Interest expense (359370000*6.44%/2)	11571714
	Discounts on notes payable		64614
	Cash (363000000*6.34%/2)		11507100
	(to record the first semiannual payment for IgWig, Inc)