ACCTG 230 Lecture Notes - Lecture 28: Interest Rate
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On January 1, Altman Company issued bonds that had a par valueof $53,500 with a stated interest rate of 4% and a 5 year maturitydate. The bonds pay interest semiannually on June 30 and December31.
The bonds are issued at 100 3/4.
a) Prepare the journal entries Altman Company mustrecord in its books at bond issuance and the first interest paymentdate. Altman Company uses the straight line method to amortize anydiscount or premium.
Date | Description | Debit | Credit |
---|---|---|---|
01/01 | |||
to record the sale of bonds at a premium (100 3/4 of parvalue) | |||
06/30 | |||
to record the semi-annual interest payment &amortization of discount or premium on bonds |
On January 1, 2017, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par.
1. How much interest will Boston pay (in cash) to the bondholders every six months?
2. Prepare journal entries to record (a) the issuance of bonds on January 1, 2017; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102.
How much interest will Boston pay (in cash) to the bondholders every six months?
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Prepare journal entries to record (a) the issuance of bonds on January 1, 2017; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.
Record the issue of bonds at par on January 1, 2017.
Record the interest payment on June 30, 2017.
Record the interest payment on December 31, 2017.
Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102.
1- Record the issue of bonds at 98.
2- Record the issue of bonds at 102.