Answer:
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Answer:
interest expense for the first semiannual interest period and subsequent: 3,965.3 dollars
Explanation:
face value 94,000
proceeds 91,947
discount 2,053
under straight-line method the discount amortization will be equally distributed among the payment
2,053 / 10 payment dates = 205.3
Then, we have to add the cash outlay in favor of the bondholders:
94,000 face value x 8% coupon rate / 2 payment per year = 3,760
Total interest expense: 3,760 + 205.3 = 3,965.3
Answer and Explanation:
1. Event Nature of expenditure
The capital expenditure is the expenditure which is incurred for one time or we can say it is spent on long term assets. While on the other hand, the revenue expenditure is expenditure which is incurred on frequent basis
Based on this, the treatment is as follows
i. Capital expenditure
ii. Revenue expenditure
iii. Revenue expenditure
iv. Capital expenditure
2. The Journal entry is shown below:-
a. Equipment Dr, $40,000
To Cash $40,000
(Being replacement of compressor is recorded)
Here we debited the equipment as it increased the assets and we credited the cash as it decreased the assets
b. Building Dr, $225,000
To Cash $225,000
Here we debited the equipment as it increased the assets and we credited the cash as it decreased the assets
