$84,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $2,100. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment.
$84,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $2,100. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Yale Corporation issued to Zap Corporation $84,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $2,100. If the bonds were sold to yield 9%, provide
a. January 1, for issuance of bonds.
b. June 30, for the first interest payment.
● Note: Round your answer to the nearest whole dollar.
| Date | Account Name | Dr. | Cr. |
|---|---|---|---|
| a. Jan. 1 |
|
||
|
|
|||
|
|
|||
| To record bond issuance. | |||
| b. June 30 |
|
||
|
|
|||
|
|
|||
| To record interest payment. |
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Transcribed Image Text:Yale Corporation issued to Zap Corporation $84,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1.
Assume that the company uses the effective interest amortization method and bond issuance costs are $2,100. If the bonds were sold to yield 9%, provide journal entries to
be made at each of the following dates.
a. January 1, for issuance of bonds.
b. June 30, for the first interest payment.
• Note: Round your answer to the nearest whole dollar.
Date
Account Name
Dr.
Cr.
a. Jan. 1
Cash
85,120
0 x
Bonds Payable
0
84,000 *
1,120 X
0
b. June 30 Interest Payable
1,120
0x
0 x
2,240
0
Check
Interest Payable
To record bond issuance.
Interest Expense
Cash
To record interest payment.
3,360
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