Price Company issued a $700,000, 8%, 10-year bond payable at face value on January 1, 2018 Interest is paid semianinually on January 1 and July 1. Requirements Journalize the issuance of the bond payable on January 1, 2018. 1. 2. Journalize the payment of semiannual interest on July 1, 2018.
Price Company issued a $700,000, 8%, 10-year bond payable at face value on January 1, 2018 Interest is paid semianinually on January 1 and July 1. Requirements Journalize the issuance of the bond payable on January 1, 2018. 1. 2. Journalize the payment of semiannual interest on July 1, 2018.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Price Company issued a $700,000, 8%, 10-year bond payable at face value on January 1, 2018 Interest is paid semiannually on January 1 and July 1.
Requirements
Journalize the issuance of the bond payable on January 1, 2018.
Journalize the payment of semiannual interest on July 1, 2018.
1.
2.
Requirement 1. Journalize the issuance of the bond payable on January 1, 2018. (Record debits first, then credits. Select explanations on the last line of the
journal entry.)
Date
Accounts and Explanation
Debit
Credit
2018
Jan 1
Expert Solution
Step 1 < Introduction>
A bond refers to fixed income instrument that represents a loan made by an investor to a borrower basically a corporate or government. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Bond owners are known as debtholders, or creditors, of the issuer.
Interest rates of bond are inversely correlated when rates go up, bond prices fall and vice-versa.
Bonds have maturity dates at which point the principal amount must be paid back in full or risk default
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