Will the income statement include cash dividends declared and paid in the report

Question

Will the income statement include cash dividends declared and paid in the reporting period? Yes or No? Explain the journal entries, for the receipt of cash, and for the first interest payment, in your own words, when, as a borrower, our company does the following: Issues Bonds at Face Value Issues Bonds at a discount Issues Bonds at a premium (Your answer for each independent situation [A, B, and C] should include the phrases "Credit to Bonds Payable" and "Contract interest Rate") Explain the change in the investment account for the year, for each of the following independent situation, when the investment is accounted for using the equity method: The company they invested in has a net loss for the year The company they invested in pays earns a profit and pays a cash dividend

Explanation / Answer

Journal entry when bond issued at par:- Date Particular L/F Dr. Amount Cr. Amount Cash A/c Dr. XXX                   to Bond Payable XXX Interest expenses Dr. XXX                     to Cash XXX Bond Payable Dr. XXX                     Cash XXX Journal entry when bond issued at Discount:- Date Particular L/f Dr. Amount Cr. Amount Cash A/C Dr. XXX Discount on Bonds Payable XXX                 to Bond Payable XXX Interest Expenses Dr. XXX              to Interest Payable XXX              to Discount on Bonds Payable XXX Bond Payable A/c Dr. XXX                        to Cash A/c XXX Journal entry when bond issued at premium:- Date Particular L/F Dr. Amount Cr. Amount Cash A/c Dr. XXX                  To bond payable XXX                 to Premium on bond payable XXX Interest expenses Dr. XXX Amortisation of premium Dr. XXX               to interest payable XXX Bonds Payable Dr. XXX                      to Cash XXX

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