On January 1, 2014, Clearwater Corporation sold a $759,000, 7 percent bond issue

Question

On January 1, 2014, Clearwater Corporation sold a $759,000, 7 percent bond issue (8 percent market rate). The bonds were dated January 1, 2014, pay interest each December 31, and mature in 9 years.

1. Prepare the journal entry to record the issuance of the bonds.

2. Prepare the journal entry to record the interest payment on December 31, 2014. Use straight-line amortization

3. Show how the interest expense and the bonds payable should be reported on the December 31, 2014, annual financial statements.

On January 1, 2014, Clearwater Corporation sold a $759,000, 7 percent bond issue (8 percent market rate). The bonds were dated January 1, 2014, pay interest each December 31, and mature in 9 years.

1. Prepare the journal entry to record the issuance of the bonds.

2. Prepare the journal entry to record the interest payment on December 31, 2014. Use straight-line amortization

3. Show how the interest expense and the bonds payable should be reported on the December 31, 2014, annual financial statements.

Explanation / Answer

1) Bank A/c Dr $759,000

To 8% Bonds $759,000

2) Interest A/c Dr $60,720

To Bank A/c $60,720

3) Interest $60,720 in Income statement

8% Bonds $759,000 in balance sheet

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

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