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vichka [17]
3 years ago
15

Pretzelmania, Inc., issues 6%, 10-year bonds with a face amount of $63,000 for $58,523 on January 1, 2018. The market interest r

ate for bonds of similar risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31.
Record the bond issue and first interest payment on June 30, 2018.
Business
1 answer:
Mamont248 [21]3 years ago
4 0

Answer:

Please refer to the below for Journal entries

Explanation:

The journal entries are seen below

1. Cash A/c Dr $58,523

Discount on bond payable A/c Cr $4,477

To bonds payable A/c Cr $63,000

(Being the issuance of bond that is recorded)

2. Interest expense A/c Dr $2,048

To discount payable A/c Cr $158

To cash A/c Cr $1,890

(Being the first interest payment that is recorded)

Note:

Interest expense

= $58,523 × 7% × 6 months ÷ 12

= $2,048

Cash

= $63,000 × 6% × 6 months ÷ 12

= $1,890

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Answer:

1.

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Date                   Account Title                                             Debit          Credit

Dec. 31             Bad debt expense                                    $12,000

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