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Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 14ISBN: 978-1305653535Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 14ISBN: 978-1305653535 Exercise 20
Entries for issuing bonds and amortizing premium by straight-line method
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following:
A. Issuance of bonds on April 1, Year 1.
B. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method.
C. Explain why the company was able to issue the bonds for $20,811,010 rather than for the face amount of $20,000,000.
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following:
A. Issuance of bonds on April 1, Year 1.
B. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method.
C. Explain why the company was able to issue the bonds for $20,811,010 rather than for the face amount of $20,000,000.
Explanation
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Journal Entry: The process of accounting...
Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac
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