On May 1, 2014, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2014, and interest is paid each January 1 and July 1. Present value data follow:
Required:
a.Compute the amount of cash received from the sale of the bond.
b.Prepare the journal entry to record the sale.
c.When preparing the journal entry, you recorded a premium or discount. Discuss why.

Question

On May 1, 2014, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2014, and interest is paid each January 1 and July 1. Present value data follow:  
Required: 
a.Compute the amount of cash received from the sale of the bond.
b.Prepare the journal entry to record the sale.
c.When preparing the journal entry, you recorded a premium or discount. Discuss why.

Quizplus · Accepted Answer

The Answer of On May 1, 2014, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2014, and interest is paid each January 1 and July 1. Present value data follow:  
Required: 
a.Compute the amount of cash received from the sale of the bond.
b.Prepare the journal entry to record the sale.
c.When preparing the journal entry, you recorded a premium or discount. Discuss why.

On May 1, 2014, a $300,000, Ten-Year, 14% Bond Was