Daan Corporation wholesales repair products to equipment manufacturers. On April

Question

Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $6,900,000 of 8-year, 7% bonds at a market (effective) interest rate of 4%, receiving cash of $8,305,293. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank.

Explanation / Answer

Journal entry :

Date account & explanation debit credit April 1,2016 Cash 8305293 Premium on bonds payable 1405293 Bonds payable 6900000 (To record bond issue) Oct 1,2016 Interest expense 153669 Premium on bonds payable 87831 Cash (6900000*7%*6/12) 241500 (To record first interest)

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.