On January 1, 2012 lones Company issued bonds with a face value of $750,000. The

Question

On January 1, 2012 lones Company issued bonds with a face value of $750,000. The bonds carry an interest rate of 8% payable each January 1. a. Prepare the journal entry for the issuance assuming the bonds are issued at 96 b. Prepare the journal entry for the issuance assuming the bonds are issued at 103 PROBLEM 4 On ADril 1. Parilo Companv borrows S75.000 from West Bank by signing a 6-month, 5% interest bearing note Prepare the necessary entries below associated with the note payable on the books of Parilo Company. a. Prepare the entry on April 1 when the note was issued. b. Prepare any adjusting journal entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made.

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit April, 01 Cash $                       75,000        To 5% note $                     75,000 (To record the the borrow of 5% note) Interest Expenses $                             938 June, 30       To Interest payable $                           938 (To record the interest payable for the 3 months on 5% note) Borrowed Amount = $                       75,000 Interest Rate @ 5% = $                         3,750 Interest for 3 months =($ 3,750 X 3/12) $                       937.50

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

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