Lamar Company authorized a $500,000, five-year, 12% bond issue dated October 1, 20X1, with semi- annual interest to be paid each September 30 and March 31. On October 1, 20X1, the bonds were issued (sold) for $497,340.
(a) Give the entry to record the sale of the bonds. (b) It is December 31, 20X1, the end of the accounting period. Give the required adjusting entry using straight-line amortization
(c) Was the bond sold at par, at a discount or at a premium ?
(d) Will interest expense be greater than or less than the cash payments for interest?

Question

Lamar Company authorized a $500,000, five-year, 12% bond issue dated October 1, 20X1, with semi- annual interest to be paid each September 30 and March 31. On October 1, 20X1, the bonds were issued (sold) for $497,340. 
(a) Give the entry to record the sale of the bonds. (b) It is December 31, 20X1, the end of the accounting period. Give the required adjusting entry using straight-line amortization
 (c) Was the bond sold at par, at a discount or at a premium ? 
(d) Will interest expense be greater than or less than the cash payments for interest?

Quizplus · Accepted Answer

The Answer of Lamar Company authorized a $500,000, five-year, 12% bond issue dated October 1, 20X1, with semi- annual interest to be paid each September 30 and March 31. On October 1, 20X1, the bonds were issued (sold) for $497,340. 
(a) Give the entry to record the sale of the bonds. (b) It is December 31, 20X1, the end of the accounting period. Give the required adjusting entry using straight-line amortization
 (c) Was the bond sold at par, at a discount or at a premium ? 
(d) Will interest expense be greater than or less than the cash payments for interest?

Lamar Company Authorized a $500,000, Five-Year, 12% Bond Issue Dated