Question

The Amazing Widget Company issues $539,000 of 7%, 10-year bonds at 104 on March 31, 2017. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the issuance includes a ________.

Answer 1

Debit to Cash for $560,560

Step-by-step explanation:

Based on the information given we were told that the Company issues the amount of $539,000 at 104 on March 31 2019 this means that the journal entry to record the issuance will includes a:

Debit to Cash for $560,560

Cr Bonds Payable $539,000

($560,560-$21,560)

Premium on on bonds Payable $21,560

[$539,000*(100%-104%)

(to record the issuance of bonds)