The Gorman Group issued $930,000 of 11% bonds on June 30, 2021, for $1,009,794. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30. Required: 1.to3. Prepare the journal entries to record their issuance by The Gorman Group on Jun 30, 2021, interest on December 31, 2021, and interest on June 30, 2022 (at the effective rate). Record the issuance of the bond on June 30, 2021. Record the interest on December 31, 2021 (at the effective rate). Record the interest on June 30, 2022 (at the effective rate).
The Gorman Group issued $930,000 of 11% bonds on June 30, 2021, for $1,009,794. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30.
Required:
1.to3. Prepare the
- Record the issuance of the bond on June 30, 2021.
- Record the interest on December 31, 2021 (at the effective rate).
- Record the interest on June 30, 2022 (at the effective rate).
Journal Entry :— It is an act of recording transaction in books of account when transaction occurred.
Bonds :— It is one of the type of securities that pays fixed periodic interest and face value amount at the end of maturity term to their investors.
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