Brief Exercise 9-56 Bonds Issued at a Discount (Effective Interest) Crafty Corporation received $472,088 of cash...
Brief Exercise 9-56
Bonds Issued at a Discount (Effective Interest)
Crafty Corporation received $472,088 of cash upon issuance of 500 $1,000 par value bonds. Each bond has a stated rate of 5% and will mature on December 31, 2026, 7 years after the issuance of the bonds. Interest is paid annually on December 31. The market rate of interest is 6%.
Required:
Prepare the journal entry for December 31, 2022. If required, round amounts to the nearest whole dollar.
| 2022 Dec. 31 | debit Credit | ||
| (Record interest expense.) |
Prepare the journal entry for December 31, 2023. If required, round amounts to the nearest whole dollar.
| 2023 Dec. 31 | debit credit | ||
| (Record interest expense.) |
Homework Answers
Interest expense 2020 = 472088*6% = 28325-25000 = 3325
Interest expense 2021 = (472088+3325)*6% = 28525-25000 = 3525
Prepare the journal entry for December 31, 2022. If required, round amounts to the nearest whole dollar.
| 2022 Dec. 31 | Interest expense (478938*6%) | 28736 | |
| Discount on bonds payable | 3736 | ||
| Bonds payable | 25000 | ||
| (Record interest expense.) |
Prepare the journal entry for December 31, 2023. If required, round amounts to the nearest whole dollar.
| 2023 Dec. 31 | Interest expense (482674*6%) | 28960 | |
| Discount on bonds payable | 3960 | ||
| Cash | 25000 | ||
| (Record interest expense.) |
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Brief Exercise 9-56
Bonds Issued at a Discount (Effective Interest)
Crafty Corporation received $472,088 of cash...
Brief Exercise 9-56 Bonds Issued at a Discount (Effective Interest) Crafty Corporation received $472,088 of cash...
Brief Exercise 9-56 Bonds Issued at a Discount (Effective Interest) Crafty Corporation received $472,088 of cash upon issuance of 500 $1,000 par value bonds. Each bond has a stated rate of 5% and will mature on December 31, 2026, 7 years after the issuance of the bonds. Interest is paid annually on December 31. The market rate of interest is 6%. Required: Prepare the journal entry for December 31, 2022. If required, round amounts to the nearest whole dollar. 2022...
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