On January 1, 2010, Osborn Company sold 12% bonds having a maturity value of $83

Question

On January 1, 2010, Osborn Company sold 12% bonds having a maturity value of $838,000 for $901,532.80, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2010, and mature January 1, 2015, with interest payable December 31 of each year. Osborn Company allocates interest and unamortized discount or premium on the effective interest basis. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

(a) Prepare the journal entry at the date of the bond issuance.

Explanation / Answer

Journal entry at date of bond issuance Debit Cash 901,532.80 Credit Bond Reserves 901,532.80

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