On the first day of its fiscal year, Simon Company issued $2,500,000 of 5-year, 10% bonds to finance its operations of producing and selling video equipment. Interest is payable semiannually. The bonds were issued at an effective interest rate of 12%, resulting in Simon Company receiving cash of $2,316,011 a. Journalize the entries to record the following: 1. Sale of the bonds. 2. First semiannual interest payment, including amortization of discount. 3. Second semiannual interest payment, including amortization of discount. b. Compute the amount of the bond interest expense for the first year.
On the first day of its fiscal year, Simon Company issued $2,500,000 of 5-year, 10% bonds to finance its operations of producing and selling video equipment. Interest is payable semiannually. The bonds were issued at an effective interest rate of 12%, resulting in Simon Company receiving cash of $2,316,011 a. Journalize the entries to record the following: 1. Sale of the bonds. 2. First semiannual interest payment, including amortization of discount. 3. Second semiannual interest payment, including amortization of discount. b. Compute the amount of the bond interest expense for the first year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On the first day of its fiscal year, Simon Company issued $2,500,000 of 5-year, 10%
bonds to finance its operations of producing and selling video equipment. Interest is
payable semiannually. The bonds were issued at an effective interest rate of 12%, resulting
in Simon Company receiving cash of $2,316,011
a. Journalize the entries to record the following:
1. Sale of the bonds.
2. First semiannual interest payment, including amortization of discount.
3. Second semiannual interest payment, including amortization of discount.
b. Compute the amount of the bond interest expense for the first year.
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