Bramble Corp. issued $529,000 of 5-year, 7% bonds at 96 on January 1, 2019. The

Question

Bramble Corp. issued $529,000 of 5-year, 7% bonds at 96 on January 1, 2019. The bonds pay interest annually.

Bramble Corp. issued $529,000 of 5-year, 7% bonds at 96 on January 1, 2019, The bonds pay interest annua Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically in Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS Compute the total cost of borrowing for these bonds. Total cost of borrowings SHOW LIST OF ACCOUNTS Prepare the journal entry to record the issuance of the bonds, assuming the bonds were issued at 104. (Cred Account Titles and Explanation Debit Credit

Explanation / Answer

1 Cash 507840 =529000*0.96 Discount on bonds payable 21160        Bonds payable 529000 Semi-annual interest over life of bonds 185150 =529000*7%*5 Principal repayment 529000 Less: Amount received 507840 Total cost of borrowing 206310 2 Cash 550160 =529000*1.04        Premium on bonds payable 21160        Bonds payable 529000 Semi-annual interest over life of bonds 185150 Principal repayment 529000 Less: Amount received 550160 Total cost of borrowing 163990

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