Corporate Financial Accounting
Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
Question
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Chapter 11, Problem 11.3EX

A.

1.

To determine

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.

Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.

To prepare: Journal entry to record issuance of the bonds.

2.

To determine

To prepare: Journal entry to record first interest payment and amortization of discount on bonds.

3.

To determine

To prepare: Journal entry to record second interest payment and amortization of discount on bonds.

B.

To determine

The amount of bond interest expense for first year.

C.

To determine

To explain: The reason why the company was able to issue the bonds for $9,594,415 rather than $10,000,000.

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Corporate Financial Accounting

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