Entries or Isauing Bopats and Amorticing Preium by traloht Line Method semianiua

Question

Entries or Isauing Bopats and Amorticing Preium by traloht Line Method semianiualy on Apnt I and Octob oumaize the entry to record the issuance of bords on April 1, 2016 For a compound transaction, it an amount box dees not require an entry, ave it tHark Bonds Payable 1i.eiox uang the strwyte ir metod the bond prem. ane tininko nbred-e the b. 1 uma ze then try tore ord the rst i trwat payment on Octobe 2016 and amortization of bond premihm for si (Round to the nearest doilarc.) For a compound transaction, it an amount bax does not require an entry, leave it blank month Premium Bonds Payable c. Why was the company able issue the bonds fer $20,811.010 tather than for the face amount of $20,000,0007 The market rate of interest is less than the contract rate of intersst 52 AM

Explanation / Answer

1, YES THE COMPANY SHOULD ISSUE THE BOND ON PREMIUM AS THE INTEREST RATEE I.E 9% IS HIGHER THAN THE MARKET INTEREST RATE i.e *% .

AS PER PV FORMULA THE ABOVE PRICE IS CORRECT

CASH 20811010 PREMIUM 811010 BONDS PAYBLE 20000000 INTEREST EXPENSE 8918899 (20000000*0.09) PRMIUM ON BONDS PAYBLE 81101 (811010/10) CASH 9000000 20000000*0.09/2

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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