Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount On July 1, Year 1, Khatri Industries, Inc. issued $18,000,000 of 10-year, 5% bonds at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar. b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar. 3. Determine the total interest expense for year 1
Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount On July 1, Year 1, Khatri Industries, Inc. issued $18,000,000 of 10-year, 5% bonds at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.Instructions 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar. b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar. 3. Determine the total interest expense for year 1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PR 14-5A Bond discount, entries for bonds payable transactions, interest method of amortizing bond discount On July 1, Year 1, Khatri Industries, Inc. issued $18,000,000 of 10-year, 5% bonds
at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.Instructions
1.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.
3. Determine the total interest expense for year 1
Transcribed Image Text:Bond discount, entries for bonds payable transactions, interest
method of amortizing bond discount
On July 1, Year 1, Khatri Industries, Inc. issued $18,000,000 of 10-year, 5% bonds
at a market (effective) interest rate of 6%, receiving cash of $16,661,102. Interest
on the bonds is payable semiannually on December 31 and June 30. The fiscal
year of the company is the calendar year.
Instructions
1. Journalize the entry to record the amount of cash proceeds from the
issuance of the bonds.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the
amortization of the bond discount, using the interest method. Round to
the nearest dollar.
b. The interest payment on June 30, Year 2, and the amortization of the
bond discount, using the interest method. Round to the nearest dollar.
3. Determine the total interest expense for Year 1.
Transcribed Image Text:Problem 14-5A
Question 1
Question 2
Question 3
a.
b.
Year 1
July 1
Year 1
Dec. 31
Year 2
June 30
Wrong
Wrong
Wrong
Wrong
Wrong
Wrong
Wrong
Wrong
Wrong
d
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