Question

Required information The following information applies to the questions displayed below) Legacy issues $700,000 of 75%, four year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31 They are issued at $643,419 when the market rate is 10% Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $700,000 on January 1, 2019 at an issue price of $643,419. Note: Enter debits before credits Date General Journal Debit Credit January 01 < Prey 3 4 5 6 of 8 !!! Next >

Answer 1

Date 1. Record the Bond Issue General Journal Debit Jan-01 Cash Discount on Bonds Payable Credit 643419 56581 700000 Bonds Payable Record the issue of the Bond with Discount

Face value of the Bond Less: Bond Selling price Dicount on bonds Payable Discount 700000 643419 56581 56581 Total Bond interest Expenses over the lifeof the bond Amount Repaid : 8 Payment of $26250 Par value at Marturiy Total repaid Less amount borrowed Total bond interest Expenses 210000 700000 910000 643419 266581 Semiannual Period Unmortized Discount 01-01-2019 06/30/2019 12/31/2019 06/30/2020 12/31/2020 Carrying Value 56581 643419 49508 650492 42436 6575641 35363 664637 28291 671710 Semiannula Discount Amortized = 56581/8=7072.625