On January 1, 2021, XYZ Corp issued 12% bonds dated January 1, 2021, with a face amount of $20 million. The bonds mature in 2030 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.  Required:  1) Determine the price of the bonds at January 1, 2021. 2) Prepare the journal entry to record the bond issuance on January 1, 2021.  3) Prepare the journal entry to record interest on June 30, 2021, using the effective interest method.

Q: On June 30, 2020, Ayayai Company issued $3,810,000 face value of 16%, 20-year bonds at $4,956,520, a…

A: Introduction: A journal entry is a recording of a business contract in the accounting system of a…

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A: When the bonds are issued at par, then there shall be no premium or discount on bonds payable.

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A:

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A:

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.