Accounting question for accountsguru
A company issued 14%, 5 year bonds with a par value of $5,000,000 on January 1, 2012. Interest is to be paid semiannually on each June 30 and December 31. The bonds are issued at $5,368,035 cash when the market rate for this bond is 12%.
- Prepare the general journal entry to record the issuance of the bonds on January 1, 2012.
- Show how the bonds would be reported on the company’s balance sheet at January 1, 2012
- Assume the company uses the effective interest method of amortization of any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2012
- Assume instead that Walker uses the straight-line method of amortization of any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2012
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