Chrissy00
Feb 20, 2013, 09:12 AM
I need help with two accounting questions please. I tried answering them twice already and got it wrong both times. Also if you could, can you explain the break down for me, as to how you got the answer so that I'll know it for the future. Thanks.
1)On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $239,811. The journal entry to record the issuance of the bond is:
(a) Debit Cash $239,811; credit Discount on Bonds Payable $9,811; credit Bonds Payable $230,000.
(b) Debit Cash $239,811; credit Premium on Bonds Payable $9,811; credit Bonds Payable $230,000.
(c) Debit Cash $239,811; credit Bonds Payable $239,811.
(d) Debit Cash $230,000; debit Premium on Bonds Payable $9,811; credit Bonds Payable $239,811.
(e) Debit Bonds Payable $230,000; debit Interest Expense $9,811; credit Cash $239,811.
2)On January 1, a company issues bonds dated January 1 with a par value of $460,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $441,361. The journal entry to record the issuance of the bond is:
(a) Debit Cash $441,361; credit Bonds Payable $441,361.
(b) Debit Cash $441,361; debit Premium on Bonds Payable $18,639; credit Bonds Payable $460,000.
(c) Debit Cash $441,361; debit Discount on Bonds Payable $18,639; credit Bonds Payable $460,000.
(d) Debit Bonds Payable $460,000; debit Interest Expense $18,639; credit Cash $478,639.
(e) Debit Cash $460,000; debit Discount on Bonds Payable $18,639; credit Bonds Payable $478,639.
1)On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $239,811. The journal entry to record the issuance of the bond is:
(a) Debit Cash $239,811; credit Discount on Bonds Payable $9,811; credit Bonds Payable $230,000.
(b) Debit Cash $239,811; credit Premium on Bonds Payable $9,811; credit Bonds Payable $230,000.
(c) Debit Cash $239,811; credit Bonds Payable $239,811.
(d) Debit Cash $230,000; debit Premium on Bonds Payable $9,811; credit Bonds Payable $239,811.
(e) Debit Bonds Payable $230,000; debit Interest Expense $9,811; credit Cash $239,811.
2)On January 1, a company issues bonds dated January 1 with a par value of $460,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $441,361. The journal entry to record the issuance of the bond is:
(a) Debit Cash $441,361; credit Bonds Payable $441,361.
(b) Debit Cash $441,361; debit Premium on Bonds Payable $18,639; credit Bonds Payable $460,000.
(c) Debit Cash $441,361; debit Discount on Bonds Payable $18,639; credit Bonds Payable $460,000.
(d) Debit Bonds Payable $460,000; debit Interest Expense $18,639; credit Cash $478,639.
(e) Debit Cash $460,000; debit Discount on Bonds Payable $18,639; credit Bonds Payable $478,639.