Question

Question 9 Tamarisk, Inc. issued $593,000 of 5-year, 7 % bonds at 98 on January 1, 2019. 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 Compute the total cost of borrowing for these bonds Total cost of borrowing

Answer 1

Account Titles and Explanation	Debit	Credit
Cash (593000*98%)	$ 581,140
Discount on bonds payable	$ 11,860
Bonds payable		$ 593,000
Total cost of borrowing (( 593,000 x 7% x 5) + 11,860)		$ 219,410
Account Titles and Explanation	Debit	Credit
Cash	$ 610,790
Bonds payable		$ 593,000
Premium on bonds payable		$ 17,790
Total cost of borrowing (( 593,000 x 7% x 5) - 17,790)		$ 189,760