Exercise 10-11 Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on Jan

Question

Exercise 10-11 Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2019, The bonds pay interest annually Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: APPLIED SKILLS VIDEO: APPLIED SKILLS Compute the total cost of borrowing for these bonds. Total cost of borrowing SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: APPLIED SKILLS VIDEO: APPLIED SKILLS Prepare the journal entry to record the issuance of the bonds, assuming the bonds were issued at 105. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: APPLIED SKILLS VIDEO: APPLIED SKILLS Compute the total cost of borrowing for these bonds, assuming the bonds were issued at 105 Total cost of borrowing Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: APPLIED SKILLS VIDEO: APPLIED SKILLS

Explanation / Answer

Cash 485000 =500000*0.97 Discount on Bonds payable 15000        Bonds payable 500000 Total interest expense 200000 =500000*8%*5 Cash received -485000 Amount payable at maturity 500000 Total cost of borrowing 215000 2 Cash 525000 =500000*1.05        Bonds payable 500000        Premium on Bonds payable 25000 Total interest expense 200000 Cash received -525000 Amount payable at maturity 500000 Total cost of borrowing 175000

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