Grocery Corporation received $330,653 for 9.50 percent bonds issued on January 1, 2021, at a market interest rate of 6.50 percent. The bonds had a total face value of $272,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the straight-line method to amortize the bond premium. Required: 1. & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.)
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
E10-11 (Algo) (Supplement 10A) Recording the Effects of a Premium Bond Issue and First Interest Period (Straight-Line Amortization) [LO 10-S1] Part 4
Grocery Corporation received $330,653 for 9.50 percent bonds issued on January 1, 2021, at a market interest rate of 6.50 percent. The bonds had a total face value of $272,000, stated that interest would be paid each December 31, and stated that they mature in 10 years. Assume Grocery Corporation uses the straight-line method to amortize the bond premium.
Required:
-
1. & 2. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31. (If no entry is required for a transaction/event, select "No
Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.)
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