Question

Concord Corporation issued $493,500 of 5-year, 5% bonds at 98 on January 1, 2020. The bonds pay interest annually Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS Compute the total cost of borrowing for these bonds Total cost of borrowing SHOW LIST OF ACCOUNTS

Answer 1

Issue Entry 1. Record the Bond Issue Debit Credit Date Accounts Name Cash (493500 0.98) 483630 Discount on Bonds Payable Bonds Payable 9870 493500 Record the Issue of the Bond with Discount Total cost of Borrowing Interest Paid = 493500*5%*5 123375 ADD: Discount on Bonds 9870 Total cost of Borrowing 133245 Issue Entry 1. Record the Bond Issue Debit Credit Date Accounts Name Cash (493500*1.03) 508305 Premium on Bonds Payable Bonds Payable 14805 493500 Record the Issue of the Bond with Premium Total cost of Borrowing Interest Paid 493500*5%*5 123375 Less : Premium on Bonds Payable 14805 Total cost of Borrowing 108570