Gradebook ORION Downlealabde elexthook Sheffield Corp. kaed $427,000 of Syear, o

Question

Gradebook ORION Downlealabde elexthook Sheffield Corp. kaed $427,000 of Syear, o% bonds at g7 on lanuary 1, 2019. The benda pay inter-an ut. Prepare the journal entry to record the issuance ofl the bonds.(Cedit account titles are automatically indented when amount is entered. Do not indent manually Account Titlems and Explanation Compute the total cost of borrowing for these bonds Total cost of borrowing Prepare the journal entry to recond the issuance of the bonds, assuming the bonds were Issued at 104. (Credit account itles are automatically indented when amount is entered. Do not indent maually) en Ask me

Explanation / Answer

Bond's Face Value = 427000
Bond's Issue Price = 427000 * 97% = 414190

Discount on Issue of Bond = 427000 - 414190 = 12810

Journal Entry

Cash....................................................... Dr.....414190
Discount on Issue of Bond......................... Dr..... 12810
Bonds Payable..........................................Cr................... 427000

Total Cost

Interest Cost + Discount on Issue of Bond
(Annual Interest * Life of Bond) + Discount on Issue of Bond
(6% of 427000 * 5) + 12810
128100 + 12810
$ 140,910

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

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