Question

# On July 31, 2021, Crane Inc. issued \$490,000 of 5-year, 4% bonds at 104. Interest is...

On July 31, 2021, Crane Inc. issued \$490,000 of 5-year, 4% bonds at 104. Interest is payable semi-annually on July 31 and January 31. Crane’s fiscal year end is January 31.

Is the market rate of interest higher or lower than 4%?

 The market rate of interest is select an option

2) Record the issue of the bonds on July 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

July 31

enter an account title to record issuance of bonds

3) Record the payment of interest on January 31, 2022, assuming the semi-annual amortization amount for this interest period is \$905. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 31

enter an account title to record interest payment on January 31

enter a debit amount

enter a credit amount

enter an account title to record interest payment on January 31

enter a debit amount

enter a credit amount

enter an account title to record interest payment on January 31

enter a debit amount enter a credit amount
(To record interest payment.)

 1 The market rate of interest is lower than 4% 2 Date Account Titles and Explanation Debit Credit July 31 Cash 509600 =490000*1.04 Bonds payable 490000 Premium on Bonds payable 19600 3 Date Account Titles and Explanation Debit Credit Jan. 31 Interest expense 8895 Premium on Bonds payable 905 Cash 9800 =490000*4%*6/12

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