Pretze mania nc issues 7% 5-year bonds with a face amount of $70 000 or $64 008

Question

Pretze mania nc issues 7% 5-year bonds with a face amount of $70 000 or $64 008 on January 2018. The market interest rate or bonds of similar risk and maturity is 8%. Interest is paid annual y on December 31. 1. & 2. Record the bond issue and first interest payment on December 31, 2018. (f no entry is required for a transaction/event, select"No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Date General Journal Debit Credit January 01 64,008 2018 Cash Discount on Bonds Payable 5,982 Bonds payable 70,000 Interest expense 2018 Discount on Bonds Payable Cash 4,900

Explanation / Answer

2) Date General Journal Debit Credit Interest expense (64008*8%) 5121 Discount on bonds payable 221 cash (70,000*7%) 4900

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