Question

May Corporation issues $2,700,000, 10-year, 10% bonds dated January 1 at 93. The journal entry to...

May Corporation issues $2,700,000, 10-year, 10% bonds dated January 1 at 93. The journal entry to record the issuance will include a:

debit to Cash for $2,700,000.

debit to Discount on Bonds Payable for $189,000.

credit to Cash for $2,511,000.

credit to Bonds Payable for $2,511,000.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Par value of bonds = $2,700,000

Issue price = 93

Cash proceeds from issue of bonds = Par value of bonds x Issue price

= 2,700,000 x 93%

= $2,511,000

Discount on issue of bonds = Par value of bonds- Cash proceeds from issue of bonds

= 2,700,000-2,511,000

= $189,000

Below mentioned journal entry need to be record:

Date General Journal Debit Credit
January 1 Cash $2,511,000
Discount on bonds payable $189,000
Bonds payable $2,700,000
( To record issuance of bonds at discount)

The journal entry to record the issuance will include a debit to Discount on Bonds Payable for $189,000.

second option is correct.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2019, ABC Corporation issued $2,300,000, 10-year, 9% bonds at 103. The journal entry...
On January 1, 2019, ABC Corporation issued $2,300,000, 10-year, 9% bonds at 103. The journal entry to record this transaction would include a: Select one: a. debit to Discount on Bonds Payable $69,000. b. credit to Premium on Bonds Payable $69,000. c. debit to Cash $2,300,000. d. credit to Bonds Payable $2,369,000.
On January 1, a company issues bonds dated January 1 with a par value of $700,000....
On January 1, a company issues bonds dated January 1 with a par value of $700,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $682,000. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $35,000; credit Premium on Bonds Payable $3,000; credit Cash $32,000. Debit Interest Expense $38,000; credit Discount on Bonds...
On January 1, a company issues bonds dated January 1 with a par value of $570,000....
On January 1, a company issues bonds dated January 1 with a par value of $570,000. The bonds mature in 5 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The market rate is 9% and the bonds are sold for $547,433. The journal entry to record the second interest paymentusing the effective interest method of amortization is: Multiple Choice Debit Interest Expense $24,717.02; credit Discount on Bonds Payable $1,917.02; credit Cash...
On January 1, a company issues bonds dated January 1 with a par value of $710,000....
On January 1, a company issues bonds dated January 1 with a par value of $710,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $698,000. The journal entry to record the first interest payment using straight-line amortization is: Multiple Choice Debit Interest Expense $30,400; credit Discount on Bonds Payable $2,000; credit Cash $28,400. Debit Interest Expense $28,400; credit Premium on Bonds...
On January 1, a company issues bonds dated January 1 with a par value of $280,000....
On January 1, a company issues bonds dated January 1 with a par value of $280,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $291,365. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.) Multiple Choice Debit Interest Payable $12,600; credit Cash $12,600. Debit Bond Interest...
1. On January 1, a company issues bonds dated January 1 with a par value of...
1. On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the issuance of the bond is: Debit Bonds Payable $300,000; debit Bond Interest Expense $12,177; credit Cash $312,177. Debit Cash $312,177; credit Bonds Payable...
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted...
Lorance Corporation issued $845,000, 9%, 10-year bonds on January 1, 2015, for $792,347. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Lorance uses the effective-interest method to amortize bond premium or discount. 1)Prepare the journal entry to record the issuance of the bonds. 2)Prepare the journal entry to record the payment of interest and the discount amortization on July 1, 2015, assuming that interest was not...
What would be the required journal entry on the date of issuance if a company issues...
What would be the required journal entry on the date of issuance if a company issues $100,000 five-year, 10% bond for $96,231 and the interest is to be paid semiannually? A. debit cash, $100,000, and credit bond payable $100,000 B. debit cash $103,769, and credit bond payable $100,000 and credit premium on bonds payable $3,769 C. debit bonds payable $103,769 and debit discount on bonds payable $3,769, and credit cash $100,000 D. debit cash $103,769 and debit discount on bonds...
Trader Joes issues $5,000,000 of 8%, 4-year bonds dated January 1, 2013, that pay interest semiannually...
Trader Joes issues $5,000,000 of 8%, 4-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of 5,030,00 Prepare the January 1, 2013, journal entry to record the issuance. For each semiannual period, compute the cash payment, the straight-line premium or discount amortization the bond interest expense Cash proceeds= Cash proceeds= Bonds interest expense= cash interest paid + bond discount Bonds interest expense= Bonds interest expense= Bonds...
On January 1, 2020, Sweetwood Corporation issues $5 million, 10-year, 9% bonds at 96, with interest...
On January 1, 2020, Sweetwood Corporation issues $5 million, 10-year, 9% bonds at 96, with interest payable annually on January 1. Which journal entry below should be used to record this transaction on January 1, 2020? (Pick the corresponding letter (a), (b), (c), or (d) for your answer.) (a) Cash........................................... 5,000,000                Bonds Payable........................................... 5,000,000 (b) Cash........................................... 4,800,000                Bonds Payable........................................... 4,800,000 (c) Discount on Bonds Payable..... 200,000       Cash............................................. 4,800,000                Bonds Payable......................................... 5,000,000 (d) Cash......................................... 5,000,000                Bonds...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT