1. Explanation Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations. Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Premium on bonds payable: It occurs when the bonds are issued at a higher price than the face value. Straight-line amortization method: It is a method of bond amortization that spreads the amount of the bond discount or premium equally over the interest period. Prepare journal entry for issuance of bonds payable on January 1, 2018. Date Account Title and Explanation Post Ref Debit ($) Credit ($) January 1, 2018 Cash 300,328 Premium on Bonds Payable (1) 50,328 Bonds Payable 250,000 (To record the issuance of bonds at premium) Table (1) Cash is an asset and it increases the value of assets. So, debit it by $300,328. Premium on Bonds Payable is an adjunct liability account and it increases the value of liabilities. So, credit it by $50,328. Bonds payable is a liability and it increases the value of liabilities. So, credit it by $250,000. Working note (1): Calculate the premium on bonds payable... 2. To determine Prepare journal entry to record first interest payment on December 31, 2018.

6th Edition

ISBN: 9781260685978

Author: PHILLIPS

Publisher: MCGRAW-HILL CUSTOM PUBLISHING

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Chapter 10, Problem 11E

To determine

Prepare journal entry to record issuance of bonds.

To determine

Prepare journal entry to record first interest payment on December 31, 2018.

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Chapter 10, Problem 10E

Chapter 10, Problem 12E

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Chapter 10 Solutions

CONNECT CODE F/FINANCIAL ACCOUNTING

Ch. 10 - Prob. 1Q Ch. 10 - Prob. 2Q Ch. 10 - What three factors influence the dollar amount...Ch. 10 - Prob. 4Q Ch. 10 - Why is Deferred Revenue considered a liability?Ch. 10 - Prob. 6Q Ch. 10 - Prob. 7Q Ch. 10 - If a company has a long-term loan that has only...Ch. 10 - What are the reasons that some bonds are issued at...Ch. 10 - Prob. 10Q

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