Answer:
It will affect the accounting equation in $7.000.
Explanation:
The Assets will increase in $8.000 because Address You now have the right to claim to a customer $8.000 and is recognized in the Receivables. At the same time, Address You has to diminish its inventories at $1.000, because it delivered the dress to the customer. Finally, on the other hand, the profits for selling the dress ($8.000 - $1.000) affect the equity, and now the Accounting equation is balanced.
Answer:
The journal entries are as follows:
(a) On January 1, 2021
Cash A/c Dr. $418,022
To Bonds payable $418,022
(To record the issue of bond)
(b) On June 30, 2021
Interest expense A/c [$418,022 × 7%/2] Dr. $14,630.77
To cash $14,630.77
(To record the first two semiannual interest payments)
(c) On December 31, 2021
Interest expense A/c Dr. $14,630.77
To cash $14,630.77
(To record the first two semiannual interest payments)
Answer:
$5,308
Explanation:
amortization June 30:
($369,908 x 6%) - ($400,000 x 5.5%) = $22,194 - $22,000 = $194
amortization December 31:
($370,102 x 6%) - $22,000 = $22,206 - $22,000 = $206
bond's carrying value = $370,102 + $206 = $370,308
The carrying value of the bonds was $370,308 on December 31, but the market value was only $365,000. Any decrease in the market value of a liability must be reported as a gain under total comprehensive income.
