Accounts & Explanations 1-Sep Cash(20000*98/100) Discount on Bonds 8% Bonds payable To record issue of bonds IC Debit $ Credit $ 19600 400 20000 1-Mar Interest on bonds 840 Cash(20000*8%*6/12) Discount on bonds (400/10) To record the interest expenses 800 40 1-Sep Interest on bonds 840 Cash(20000*8%*6/12) Discount on bonds (400/10) To record the interest expenses 800 40
Please I want answer for the second question which is depending on the answer of question 1 which is already answered. Big thanks
- On September 1, Deutsch Limited issues 8%, 5-year bonds payable with a maturity value of OR 20,000. The bonds sell at 98 and pay interest on March 1 and September Deutsch amortize bond discount by the straight-line method.
Required:
Journalize the issuance of the bonds on September 1, and the semiannual interest payment on March 1 and September 1.
The discount on bonds is the amount, which is computed by subtracting the sales proceeds from the face
Bond discount = $400
Number of periods over which bond discount is amortized = 5 years*2 = 10
Semi-annual bond amortization = (400/10)
- What are the two categories of liabilities reported on the
balance sheet ? Provide example of each.
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