Please debit/credit by journalizing this transaction: July 7: Purchased a 5-year

Question

Please debit/credit by journalizing this transaction: July 7: Purchased a 5-year bond. Face value $250,000, stated interest rate 5%, market interest rate 7% with semi-annual interest payments due June 30 and December 31 (round to the nearest dollar) Please debit/credit by journalizing this transaction: July 7: Purchased a 5-year bond. Face value $250,000, stated interest rate 5%, market interest rate 7% with semi-annual interest payments due June 30 and December 31 (round to the nearest dollar) July 7: Purchased a 5-year bond. Face value $250,000, stated interest rate 5%, market interest rate 7% with semi-annual interest payments due June 30 and December 31 (round to the nearest dollar)

Explanation / Answer

Date Accounts Tiltes Debit $ Credit $ 7-Jul Bond Receivable 250000 Cash 229204 Discount on Bond receivable 20796 Note: price of the bond = (250000*5% / 2) * A/f(3.5%,10) +250000 * F/f(3.5%,10) 6250 *8.3166 + 250000 * 0.7089 =$229204

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