Assume that the following are independent situations recently reported in the Wa

Question

Assume that the following are independent situations recently reported in the Wall Street Journal.

1.
General Electric (GE) 7% bonds, maturing January 28, 2013, were issued at 111.12. 2.
Boeing 7% bonds, maturing September 24, 2027, were issued at 99.08.
Assume that the following are independent situations recently reported in the Wall Street Journal.

1.
General Electric (GE) 7% bonds, maturing January 28, 2013, were issued at 111.12. 2.
Boeing 7% bonds, maturing September 24, 2027, were issued at 99.08. Prepare the journal entry to record the issue of each of these two bonds, assuming each company issued $800,000 of bonds in total. Assume that the following are independent situations recently reported in the Wall Street Journal.

1.
General Electric (GE) 7% bonds, maturing January 28, 2013, were issued at 111.12. 2.
Boeing 7% bonds, maturing September 24, 2027, were issued at 99.08.

Explanation / Answer

Hi,

Please find the answer as follows:

1.

Cash Dr. 888960 (1.1112*800000)
Bond Payable Cr. 800000

Premium on Bonds Payable Cr. 88960

2.

Cash Dr. 792640 (.9908*800000)
Discount on Bonds Payable Dr. 7360
Bond Payable Cr. 800000

Thanks.

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