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weqwewe [10]
3 years ago
15

Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017. Garcia Compa

ny issues 9.00%, 15-year bonds with a par value of $400,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.00%, which implies a selling price of 115 3/4.
Business
1 answer:
ELEN [110]3 years ago
8 0

Answer:

Journal Entries for jan 1, 2017

Explanation:

Face value of bond = 400,000

Proceeds = 400,000 X 1.1575 = 463,000

Premium = 463,000 - 400,000 = 63,000

Jan 1, 2017

                                                   Debit        Credit

Cash                                         463,000

Premium                                                       63,000

Bond payable                                              400,000

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Answer:

Date     Account Titles and Explanation              Debit       Credit

              Land                                                         $84,000

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Workings:

Amount of Common stock = Number of shares * Paid in capital per share

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Amount of excess of paid in capital = Market value of land - Amount of common stock

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= $72,000

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