Homework Help is Here – Start Your Trial Now!
Business
Accounting
Issuing Bonds at a Premium On the first day of the fiscal year, a company issues an $4,900,000, 6%, 4-year bond that pays semiannual interest of $147,000 ($4,900,000 x 6% x V2), receiving cash of $5,258,948. Journalize the bond issuance. If an amount box does not require an entry, leave it blank. Cash 4,603,694 Discount on Bonds Payable 296,306 x Bonds Payable 4,900,000

Issuing Bonds at a Premium On the first day of the fiscal year, a company issues an $4,900,000, 6%, 4-year bond that pays semiannual interest of $147,000 ($4,900,000 x 6% x V2), receiving cash of $5,258,948. Journalize the bond issuance. If an amount box does not require an entry, leave it blank. Cash 4,603,694 Discount on Bonds Payable 296,306 x Bonds Payable 4,900,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

please help solve and explain equation

**Issuing Bonds at a Premium** On the first day of the fiscal year, a company issues a $4,900,000, 6%, 4-year bond that pays semiannual interest of $147,000 ($4,900,000 × 6% × ½), receiving cash of $5,258,948. **Journalize the bond issuance:** If an amount box does not require an entry, leave it blank. - **Cash** - Debit: $5,258,948 - **Discount on Bonds Payable** - (This entry is incorrect, no amount should be recorded here as a discount; typically used if there's an actual discount, which is not applicable in this scenario) - **Bonds Payable** - Credit: $4,900,000 **Feedback** - The cash received amount is entered as a debit to reflect an increase in the company's cash assets. - The bonds payable amount is entered as a credit to reflect the company’s liability for the full face value of the bonds. - The feedback clarifies the correct accounting treatment for issuing bonds at a premium. (Note: The provided details show a misstep with a "Discount on Bonds Payable" entry, which should not apply in a premium issuance situation.)
Transcribed Image Text:**Issuing Bonds at a Premium** On the first day of the fiscal year, a company issues a $4,900,000, 6%, 4-year bond that pays semiannual interest of $147,000 ($4,900,000 × 6% × ½), receiving cash of $5,258,948. **Journalize the bond issuance:** If an amount box does not require an entry, leave it blank. - **Cash** - Debit: $5,258,948 - **Discount on Bonds Payable** - (This entry is incorrect, no amount should be recorded here as a discount; typically used if there's an actual discount, which is not applicable in this scenario) - **Bonds Payable** - Credit: $4,900,000 **Feedback** - The cash received amount is entered as a debit to reflect an increase in the company's cash assets. - The bonds payable amount is entered as a credit to reflect the company’s liability for the full face value of the bonds. - The feedback clarifies the correct accounting treatment for issuing bonds at a premium. (Note: The provided details show a misstep with a "Discount on Bonds Payable" entry, which should not apply in a premium issuance situation.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Techniques of Time Value Of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS