Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2014. T

Question

Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2014. The bonds pay interest twice a year. Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2014. The bonds pay interest twice a year. Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2014. The bonds pay interest twice a year. Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2014. The bonds pay interest twice a year. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Compute the total cost of borrowing for these bonds. Prepare the journal entry to record the issuance of the bonds, assuming the bonds were issued at 105. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Compute the total cost of borrowing for these bonds, assuming the bonds were issued at 105.

Explanation / Answer

Issuance of bonds at $97 Debit Credit Bank a/c $ 485,000.00 Discount on issue of bonds $    15,000.00 To 8% bonds $ 500,000.00 (Being 8% bonds issued at discount)

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