What journal entry should the company make on January 1, 204? What effect does t

Question

What journal entry should the company make on January 1, 204? What effect does this entry have on the accounting equation? What journal entry should the company make to record the sale of the bonds on january 1.2014? What effect does this entry have on the accounting equation? What journal entry should the company make on July 1.2014 to record the first interest payment? What effect does this entry have on the accounting equation? What journal entry should the company make on January 1.2019 to record the first interest payment? What effect does this entry have on the accounting equation?

Explanation / Answer

a) Dr Cash 223000

    Dr Discount on Bonds Payable 40000

                   Cr Bonds Payable 263000

b) Dr Bond Interest Expense 25040

Cr Discount on Bonds 4000 (40000 /10)

Cr Cash 21040 (263000 x 8%)

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