Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 8/31/y1, $3,000,000 face value bonds are issued fo

8/31/y1, $3,000,000 face value bonds are issued for $2,600,000 plus accrued interest. These bonds pay interest...

Free

50.1K

Verified Solution

Question

Accounting

8/31/y1, $3,000,000 face value bonds are issued for $2,600,000plus accrued interest. These bonds pay interest on October 31 andApril 30. These bonds have a coupon rate of 6%, and are dated April30, y1. The bonds are 20-year bonds, and as such mature on April30, Y21. Please record the following, using the straight-lineapproach. This company has a December 31 year end. 8/31/y1,issuance of the bonds (include accrued interest). 10/31/y1,interest payment. 12/31/y1, accrual of interest. 4/30/y2, interestpayment.

Answer & Explanation Solved by verified expert
4.4 Ratings (552 Votes)

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Date Account Debit Credit
31 Aug Cash ($2,600,000+$60,000) $2,660,000
Discount on Bond Payable $   400,000
     Bond Payable $3,000,000
     Interest Payable ($3,000,000*6%*4/12) $     60,000
(to record bond issuance)
Oct 31 Interest Expense (Plug in) $     51,053
Interest Payable (From Aug 31) $     60,000
     Discounts on Bond Payable ($400,000/38months*2months) $     21,053
     Cash ($3,000,000*6%*6//12) $     90,000
(interest recorded)
Dec 31 Interest Expense (Plug in) $     51,053
     Discounts on Bond Payable ($400,000/38months*2months) $     21,053
     Interest Payable (3m*6%*2/12) $     30,000
(interest recorded)
Apr 30 Interest Expense (Plug in) $   102,105
Interest Payable (From Dec 31) $     30,000
     Discounts on Bond Payable ($400,000/38months*4months) $     42,105
     Cash ($3,000,000*6%*6//12) $     90,000
(interest recorded)

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

The following contingency table shows the number of two-bedroom apartments grouped by monthly rent and location. Monthly Rent                      York      ...

Medical Sciences
1.2K views

croup ,epiglottitis and RSV identify the etiology ,symptoms and treatment of selected neonatal and pediatric disease

Biology
1.2K views

Within your blood, the majority of carbon dioxide is transported by this means:Dissolved in blood...

Physics
1.2K views

A plano convex lens made of material of refractive index with radius of curvature R...

Basic Math
1.2K views

8 Subtract 8 4 O A 3 2 OB 3 O C 412 OD 4

Basic Math
1.2K views

13 98345 x 100 OA 983 45 OB 9 8345 OC 98 345 OD 0098345

Basic Math
1.2K views

The number of employees working in a farm is increased by 25 and the wages...

Basic Math
1.2K views

A building 160 feet tall casts a 90 foot long shadow. If a person looks...

Basic Math
1.2K views

Draw the shape, Find (b) period, (c) amplitude, (d) width, (e) shift (f) (x?),x?, x?,...

Basic Math
1.2K views

A test to measure aggressive tendencies was given to a group of teenage boys who...

Accounting
1.2K views

On July 11, 2020, Ted purchased a small software company for $200,000. He paid $120,000...

Accounting
1.2K views

Ashley Williams opened Ashleys Maids Cleaning Service on July 1, 2020. During July, the company...