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29 January, 05:23

Garcia company issues 8.00%, 15-year bonds with a par value of $290,000 and semiannual interest payments. on the issue date, the annual market rate for these bonds is 6.00%, which implies a selling price of 114 3/4.

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  1. 29 January, 05:52
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    Journal Entry

    Explanation:

    The Journal entry is shown below:-

    Cash Dr, $332,746

    To Bonds payable $290,000

    To premium of the issue on bonds $42,746

    (Being bonds issued for cash premium is recorded)

    Working note

    Selling price of bonds = $290,000 * 114.75%

    = $332,746
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