Question

Exercise 10-11 a1-a2, b1-b2 Whispering Winds Corp. issued $530,000 of 5-year, 10% bonds at 99 on January 1, 2020. The bonds pay interest annually. D Your answer is partially correct. Try again. 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 Cash Discount on Bonds Payable Bonds Payable E Your answer incorrect. Try again. Compute the total cost of borrowing for these bonds. Total cost borrowing E Your answer is incorrect. Try again. entered. Do not indent manually.) Prepare the joumal entry to record the issuance of the bonds, assuming the bonds were issued at 105. (Credit account titles are automatically indented when amount Credit Account Titles and Explanation Debit E Your answer is incorrect. Try again. Compute the total cost of borrowing for these bonds, assuming the bonds were issued at 105. Total cost borrowing Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans a-1 Credit Particulars Cash Discount on Bond Payable Bond Payable |(To Record issuance of Bond) Debit $5,24,700 $5,300 [$530000/100x99] $5,30,000 Ans a-2 Total cost borrowing: Interest payment Add: Maturit Value Total Less: Amount borrowed Totla cost of borrowing $2,65,000 [($530000 x 10%) x 5] $5,30,000 $7,95,000 ($5,24,700) $2,70,300 Ans b-1 Debit $5,56,500 Particulars Cash Premium on Bond Payable Bond Payable (To Record issuance of Bond) Credit [$530000/100x105) $26,500 $5,30,000 Ans b-2 Total cost borrowing: Interest payment Add: Maturit Value Total Less: Amount borrowed Totla cost of borrowing $2,65,000[($530000 x 10%) x 5] $5,30,000 $7,95,000 ($5,56,500) $2,38,500