The Gorman Group issued $830,000 of 9% bonds on June 30 2013, for $912,141. The

Question

The Gorman Group issued $830,000 of 9% bonds on June 30 2013, for $912,141. The bonds were dated on June 30 and mature on June 30, 2033 (20 years). The market yield for bonds of similar risk and maturity is 8%. Interest is paid semiannually on December 31 and June 30. Required Complete the below table to record the company's journal entry. (Enter interest rate to 1 decimal place.) Cash Cash Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field. Journal Entry Worksheet Record the issuance of the bond on June 30, 2013 30.2013 Enter debits before credits

Explanation / Answer

Journal Entry on 30-06-2013

Cash A/c dr 912141

To 9%bonds A/c 830000

To Premium A/c 82141

Dec31 2013

Interest Expenses = 830000*9/100*1/2 = $37350

Amortizatio of premium = 82141/20*1/2 = $2054

Therefore amount charged to P&L A/c = 37350 - 2054 = $35296

P&L A/c dr $35296

To Interest Expense A/c $35296

June30 2014

Interest Expenses = 830000*9/100*1/2 = $37350

Amortizatio of premium = 82141/20*1/2 = $2054

Therefore amount charged to P&L A/c = 37350 - 2054 = $35296

P&L A/c dr $35296

To Interest Expense A/c $35296

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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