On August 11, 2016, the Company issued $1.0 billion aggregate principal amount of 2.5% Notes due...
On August 11, 2016, the Company issued $1.0 billion aggregate principal amount of 2.5% Notes due in 2026. Proceeds before expenses were $993.
According to the financial statements:
a. Reconstruct the estimated journal entry for the issuance of the bonds, including any discount or premium and issuance costs.
Homework Answers
Face value of Bond is $1,000/- and bonds were issued at $993/-.
Number of bonds issued = $1 billion/ $1000 = 1 million bonds
Total proceeds from bonds = 1,000,000 * $993 = $993,000,000.
Journal
Bank A/c - Dr $993,000,000
Discount on issue of bond A/c - Dr $7,000,000
To Bonds Payable $1,000,000,000
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