On January 1, 2016, Boston Enterprises issues bonds that have a $2,750,000 par v
ID: 2571499 • Letter: O
Question
On January 1, 2016, Boston Enterprises issues bonds that have a $2,750,000 par value, mature in 35 years, and pay 6% interest semiannually on June 30 and December 31. The bonds are sold at par.A. How much interest will Boston pay (in cash) to the bond holders every 6 months?
B. Prepare the journal entry to record the issuance of bonds on January 1, 2016.
C. Prepare the journal entry to record the first interest payment on June 30, 2016.
D. Prepare the journal entry to record the second interest payment on December 31, 2016.
E. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 97.
F. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 107. On January 1, 2016, Boston Enterprises issues bonds that have a $2,750,000 par value, mature in 35 years, and pay 6% interest semiannually on June 30 and December 31. The bonds are sold at par.
A. How much interest will Boston pay (in cash) to the bond holders every 6 months?
B. Prepare the journal entry to record the issuance of bonds on January 1, 2016.
C. Prepare the journal entry to record the first interest payment on June 30, 2016.
D. Prepare the journal entry to record the second interest payment on December 31, 2016.
E. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 97.
F. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 107.
A. How much interest will Boston pay (in cash) to the bond holders every 6 months?
B. Prepare the journal entry to record the issuance of bonds on January 1, 2016.
C. Prepare the journal entry to record the first interest payment on June 30, 2016.
D. Prepare the journal entry to record the second interest payment on December 31, 2016.
E. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 97.
F. Prepare the journal entry to record the issuance of bonds on January 1, 2016 assuming they are issued at 107.
Explanation / Answer
A) interest paid every 6 months 2,750,000*6%*1/2 82500 B) Journal Entry Date Accounting titles & Explanations Debit Credit 1/1/2016 Cash 2,750,000 bonds payable 2,750,000 C 6/30/2016 interest expense 82,500 cash 82,500 D 12/31/2016 interest expense 82,500 cash 82,500 E 1/1/2016 Cash (2,750,000*.97) 2667500 Discount on bonds 82,500 Bonds payable 2,750,000 F 1/1/2016 Cash (2,750,000*1.07) 2942500 premium on bonds payable 192,500 bonds payable 2,750,000
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