Date | Accounting titles & Explanations | Debit | Credit | |||||
1-Jul | Cash | 1,237,668 | ||||||
Discount on bonds payable | 62,332 | |||||||
Bonds payable | 1,300,000 | |||||||
2-a) | ||||||||
31-Dec | interest expense | 69452 | ||||||
Discount on bonds | (62332/14) | 4452 | ||||||
cash | (1,300,000*5%) | 65000 | ||||||
2-b) | ||||||||
30-Jun | interest expense | 69452 | ||||||
Discount on bonds | 4452 | |||||||
cash | 65000 | |||||||
3) | total interest expense for year 1 | |||||||
69,452 | ||||||||
4) | yes | |||||||
where I = 5.5% and t =14 years) | ||||||||
5) | present value of the face amount | (1,300,000*.47257) | 614341 | |||||
PV of the semi annual interest payment | (65000*9.58965) | 623327 | ||||||
price received for the bonds | 1237668 | |||||||
Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Danzer Industries Inc. issued...
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On July 1, Year 1, Danzer Industries Inc. issued $4,200,000 of 7-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $3,992,137. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an...
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