m Corporation issued 5-year bonds with a face value of $250,000 on July 1, 2022, in order to fund a plant expansion. The bonds mature on June 30th, 2027, with interest payable on December 31, and June 30. The contract (stated) rate of interest is 10%. When the bonds sold in the marketplace, the market rate of interest was 10.6%. Elm’s fiscal year ends on December 31. 1) At what price were the bonds issued? Prepare the journal entry. What would be the price quote for the bonds? 2) Prepare the journal entry for December 31, 2022. What would the semiannual interest entry be under the straight-line method?
m Corporation issued 5-year bonds with a face value of $250,000 on July 1, 2022, in order to fund a plant expansion. The bonds mature on June 30th, 2027, with interest payable on December 31, and June 30. The contract (stated) rate of interest is 10%. When the bonds sold in the marketplace, the market rate of interest was 10.6%. Elm’s fiscal year ends on December 31. 1) At what price were the bonds issued? Prepare the journal entry. What would be the price quote for the bonds? 2) Prepare the journal entry for December 31, 2022. What would the semiannual interest entry be under the straight-line method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Elm Corporation issued 5-year bonds with a face value of $250,000 on July 1, 2022, in order to fund a plant expansion. The bonds mature on June 30th, 2027, with interest payable on December 31, and June 30. The contract (stated) rate of interest is 10%. When the bonds sold in the marketplace, the market rate of interest was 10.6%. Elm’s fiscal year ends on December 31.
1) At what price were the bonds issued? Prepare the
2) Prepare the journal entry for December 31, 2022. What would the semiannual interest entry be under the straight-line method?
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