On the first day of fiscal year a company issued 100000, 9% , 5- year that’s sem

Question

On the first day of fiscal year a company issued 100000, 9% , 5- year that’s semiannual of 45,000 On the first day of fiscal year a company issued 100000, 9% , 5- year that’s semiannual of 45,000 On the first day of fiscal year a company issued 100000, 9% , 5- year that’s semiannual of 45,000 On the first day of fiscal year a company issued 100000, 9% , 5- year that’s semiannual of 45,000 On the first day of fiscal year a company issued 100000, 9% , 5- year that’s semiannual of 45,000 On the first day of the fiscal year, a company issues a $1,000,000, 9%, 5-year bond that pays semiannual interest of $45,000 ($1,000,000 x 9 cash of $884,179. Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank or enter "o". Cash Premium on Bonds Payable ?? 05 PM

Explanation / Answer

The cash received from issuance of bonds is less than the face value of bonds, thus bonds are issued at discount. Journal entry for issuance of bonds is shown as follows:-

Journal Entries (Amounts in $)

Account Titles and Explanations Debit Credit Cash 884,179 Discount of Bonds Payable (1,000,000 - 884,179) 115,821 Bonds Payable 1,000,000

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