Bond Interest Expense & Bond Retirement Journal Entries On January 1, 2021, Dominguez Company issues 7-year bonds with a face value of $10,000,000 and a stated annual interest rate of 4%. The bonds pay interest semiannually on June 30 and December 31. The market rate of interest is 5%, and the company receives cash proceeds of $9,415,454 when the bonds are issued. Provide the journal entry that Dominguez will make to record the second bond interest payment on December 31, 2021. Provide the journal entry that Dominguez will make to record the principal payment of $10,000,000 on December 31, 2030. On January 1, 2021, Bella Corporation issues 6-year bonds with a face value of $20,000,000 and a stated annual interest rate of 6%. The bonds pay interest annually on December 31. The market rate of interest is 5%, and the company receives cash proceeds of $21,015,138 when the bonds are issued. Provide the journal entry that Bella will make to record the second bond interest payment on December 31, 2022. Provide the journal entry that Bella will make if it retires the bond early on December 31, 2022 (immediately after the 2nd interest payment). Assume Bella buys back the bonds at a price of 102.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 70E

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PART C: Bond Interest Expense & Bond Retirement Journal Entries

On January 1, 2021, Dominguez Company issues 7-year bonds with a face value of $10,000,000 and a stated annual interest rate of 4%. The bonds pay interest semiannually on June 30 and December 31. The market rate of interest is 5%, and the company receives cash proceeds of $9,415,454 when the bonds are issued.

Provide the journal entry that Dominguez will make to record the second bond interest payment on December 31, 2021.

Provide the journal entry that Dominguez will make to record the principal payment of $10,000,000 on December 31, 2030.

On January 1, 2021, Bella Corporation issues 6-year bonds with a face value of $20,000,000 and a stated annual interest rate of 6%. The bonds pay interest annually on December 31. The market rate of interest is 5%, and the company receives cash proceeds of $21,015,138 when the bonds are issued.

Provide the journal entry that Bella will make to record the second bond interest payment on December 31, 2022.

Provide the journal entry that Bella will make if it retires the bond early on December 31, 2022 (immediately after the 2^nd interest payment). Assume Bella buys back the bonds at a price of 102.

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