The City of Buffalo issued 300 bonds at their face value of $7,000 each plus accrued...

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The City of Buffalo issued 300 bonds at their face value of $7,000 each plus accrued...

The City of Buffalo issued 300 bonds at their face value of $7,000 each plus accrued interest on June 1, 2020. The term of the bonds was January 1, 2020, to January 1, 2026, with interest payable semi-annually each January 1 and July 1 at 7%. Buffalo uses the effective interest method.

Prepare the company’s journal entry for the date of issuance

June 1, 2020	Dr. Cash
	Cr. Binds Payable
	Cr. Interest Expense

Prepare the company’s journal entry for the July 1 interest payment

July 1, 2020	Dr. Interest Expense
	Cr. Cash

Prepare the company’s December 31 adjusting entry

Dec 31, 2020	Dr. Interest Expense
	Cr. Interest Payable

please give the current formula.

business accounting

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Answer 1

Answer #1

A.) Prepare the Company's Journal Entry for the date of issuance

Date	Description	Amount(Dr.)	Amount(Cr.)

June 1,2020	Dr. Cash	$2,161,250.00		(2100000+61250)
	Cr. Bonds Payable		$2,100,000.00	(7000*300)
	Cr. Interest Expense		$61,250.00	((700030057)/(10012))

B.) Prepare the company's journal entry for the july 1 interest payment

Date	Description	Amount(Dr.)	Amount(Cr.)

July 1,2020	Dr. Interest Expense	$73,500.00		((700030067)/(10012))
	Cr. Cash		$73,500.00

C.) Prepare the company's December 31 adjusting entry

Date	Description	Amount(Dr.)	Amount(Cr.)

Dec. 31, 2020	Dr. Interest Expense	$73,500.00		((700030067)/(10012))
	Cr. Interest Payble		$73,500.00

Current Formula
	(No. of Bonds * Face Value * 7% * 6/12)
	300 * 7000 * 7% * 6/12
	$73,500.00

Thank You

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Answer 2

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