Earnest Corporation issued $200,000, 10-year mortgage bonds to Eather Corporation at Par value. The bonds bear a nominal interest rate of 11% and interest is paid semi-annually on January 1 and July 1. The market rate of interest is 10%. The original issue price of bonds for Net Corporation would be (Round your answer to the nearest dollar) a. $212,462 b. $200,000 c. $105,975 d. $188,050

Earnest Corporation issued $200,000, 10-year mortgage bonds to Eather Corporation at Par value. The bonds bear a nominal interest rate of 11% and interest is paid semi-annually on January 1 and July 1. The market rate of interest is 10%. The original issue price of bonds for Net Corporation would be (Round your answer to the nearest dollar) a. $212,462 b. $200,000 c. $105,975 d. $188,050

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Yale Corporation issued $36,000 , 8 % ( cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Yale amortizes any bond discount or premium using the effective interest amortization method and bond issuance costs are $900. 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 answers to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount and Debt Issuance Costs Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. V V V V ✓ V Dr. 32,758 3,242 0 1,474 0 0 Cr. 0✔ 0✓ 36,000 ✓ 0x 30 x 1,440
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