Jensen Corporation issued dollar 1,000,000 in bonds that mature in 10 yean. The

Question

Jensen Corporation issued dollar 1,000,000 in bonds that mature in 10 yean. The bonds have a stated interest rate of 9 percent and pay interests on 6/30 and 12/31. The bonds were sold at the market rate of 10 percent for dollar 937,699. Jensen uses the effectivc-interest method. Give all journal entries related to record the issuance of the bonds. Indicate the account title to be debited by dollar 937,699. Acct Receivable Cash LT Bonds Payable Discount on LT Bonds Payable None Indicate the account title to be debited by dollar 62,301. Cash Discount on LT Bonds Payable Interest Expense Premium on LT Bonds Payable Gain on Bonds Issuance Indicate the account title to be credited by dollar 1,000,000. Discount on LT Bonds Payable Cash LT Bonds Payable Interest Expense Treasury Stock Transaction 3B - 6/30/Y3 and 12/31/Y3; What amount of interest expense that should be recorded on Jun. 30, Y3? Dollar 45,000 B. dollar 46,885 dollar 56,000 dollar 46,979 dollar 47,028 What amount of cash interest should be paid on Jun. 30, Y3? dollar 45,000 dollar 46,885 dollar 56,000 dollar 46,979 dollar 47,028 What amount of interest expense that should be recorded on Dec. 31, Y3? dollar 45,000 dollar 46,885 dollar 56,000 dollar 46,979 dollar 47,028 What amount of cash interest should be paid on Dec. 31, Y3? dollar 45,000 dollar 46,885 dollar 56,000 dollar 46,979 dollar 47,028 What is the book value of the bond on Dec. 31, Y3? dollar 1,000,000 dollar 937,699 dollar 941,563 dollar 939,584 dollar 943,641

Explanation / Answer

36 - b cash would be debited

37- B discount on lt bonds payable

38 - C LT bonds Payable

39 - b = 937699*5% = 46885

40-A 1000000*4.5% =45000

46885-45000 = 1885

41- D 937699+1885 = 939584*5% = 46979.2 = 46979

42-A 45000

43-C 46979-45000=1979   

937699+1885 = 939584+1979 = 941563

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