Ask Question
30 May, 03:39

Issuing Bonds at a Premium On the first day of the fiscal year, a company issues a $5,000,000, 7%, five-year bond that pays semiannual interest of $175,000 ($5,000,000 * 7% * ½), receiving cash of $5,400,000. Journalize the bond issuance. If an amount box does not require an entry, leave it blank.

+2
Answers (1)
  1. 30 May, 04:08
    0
    Dr Cash $5,400,000

    Cr Bonds payable $5,000,000

    Cr Premium on bonds payable $400,000

    Explanation:

    The cash proceeds from the bond issuance is $5,400,000 which is divided $5,000,000 face value and $400,000 premium on bonds payable ($5,400,000-$5,000,000).

    The appropriate accounting entries would to debit cash account with the total proceeds of $5,400,000 since cash has increased, while crediting bonds payable and premium on bonds payable with $5,000,000 and $400,000 respectively.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Issuing Bonds at a Premium On the first day of the fiscal year, a company issues a $5,000,000, 7%, five-year bond that pays semiannual ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers