Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2016. Garcia Company issues 9.00%, 15-year bonds with a par value of $310,000 and semiannu...
Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2016. Garcia Company issues 9.00%, 15-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.00%, which implies a selling price of 118 2/5.
- Record the issue of bonds with a par value of $310,000.
Note: Enter debits before credits.
|
Homework Answers
| Par value of bonds | 310000 | |||||
| Issue price | 118.4 | |||||
| Amount received on issuance | 367040 | |||||
| (310000*118.40%) | ||||||
| Journal entry: | ||||||
| Date | Accounts title and explanations | Debit $ | Credit $ | |||
| 01.01.16 | Cash account | 367040 | ||||
| Bonds Payable | 310000 | |||||
| Premium on Bonds Payable (367040-310000) | 57040 | |||||
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