Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a corporation has many options to raise capital in

A corporation has many options to raise capital in order for expansion and or operations....

70.2K

Verified Solution

Question

Accounting

A corporation has many options to raise capital in order for expansion and or operations. The XYZ Corporation has to raise $500,000.00 in new capital, for the development of a new product. They decide to issue to sell stock for a portion and issue bonds for a portion. XYZ corporation issued 150,000 shares at $1.75 each for a total of $262,500, and decided to issue bonds for the rest at a face value of $1,000.00 each for five years at an interest rate of 5%.

a. How is the stock transaction recorded in the accounting system, use Debits and Credits and account titles to show how the transactions are recorded.

b. How is the bonds stock transaction recorded in the accounting system, use Debits and Credits and account titles to show how the transactions are recorded.

c. After six months XYZ Corporation has to make their first interest payment on the bonds that they issued. What is the amount of the interest payment, and what does the transaction look like in the accounting system, using debits and credits and account names to show the transaction.

Answer & Explanation Solved by verified expert
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