Question

Application Problem 10-4A b-d Spring Water Company Ltd. needed to raise $75 million of additional capital to finance the expansion of its bottled water facility. After consulting an investment banker, it decided to issue bonds. The bonds had a face value of $75 million and an annual interest rate of 4.5%, paid semi-annually on June 30 and December 31, and will reach maturity on December 31, 2030. The bonds were issued at 96.1 on January 1, 2021, for $72,075,000, which represented a yield of 5%. Your answer is partially correct. Try again. Show the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Cash Notes Payable SHOW LIST OF ACCOUNTS LINK TO TEXT Your answer is partially correct. Try again. Show the journal entries to record the first two interest payments. Ignore year-end accruals of interest. (Round answers to the nearest whole dollar, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit June 30 Interest Expense Notes Payable Cash UX December 31 Interest Expense Notes Payable Cash SHOW LIST OF ACCOUNTS LINK TO TEXT

Answer 1

		Debit	Credit
	Cash	72075000
	Notes Payable		72075000
June 30	Interest expense	1801875		=72075000*5%/2
	Notes Payable		114375
	Cash		1687500	=75000000*4.5%/2
December 31	Interest expense	1804734		=(72075000+114375)*5%/2
	Notes Payable		117234
	Cash		1687500	=75000000*4.5%/2
Note: Bonds Payable can alternatively be used for Notes Payable Account Title.