Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 1171⁄4. Prepare the journal entry for the issuance of these bonds for cash on January 1.

Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 1171⁄4. Prepare the journal entry for the issuance of these bonds for cash on January 1.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5MC: On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000...

See similar textbooks

Related questions

Q: Buffalo Corporation issues $590,000 of 9% bonds, due in 10 years, with interest payable…

A: Number of half years=10×2=20 half-years

Q: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $110,000…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: Brussels Enterprises Issues bonds at par dated January 12019, that have a \$3,400,000 par value,…

A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…

Q: Chase Corporation has $7,500,000 of 5 percent, 10-year bonds dated January 1, with interest payment…

A: A bond payable's sustaining value is another word for the book value of a bond payable. Bond payable…

Q: On April 1, Year 1, Greenway Corporation issues $20 million of 10%, 20-year bonds payable at par.…

A: Bonds means an instrument issued by company acknowledging the debt due from company to bond holder.…

Q: On September 1, Deutsch Limited issues 8%, 5-year bonds payable with a maturity value of OR 20,000.…

A: Journal entries are the transactions that are recorded in the primary book. They are chronological…

Q: On January 1, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years,…

A: The question is based on the concept of Financial Accounting.

Q: Moss Co. issued $840,000 of five-year, 11% bonds, with interest payable semiannually, at a market…

A: A bond is a financial security that is sold by business firms to raise borrowing funds. It is issued…

Q: On April 1, year 1, Opera Corporation issues P60 million of 12%, 10-year bonds payable at par.…

A: One of the sources used by the business entities to raise their share capital is the issue of debt…

Q: On January 1, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years,…

A: We have the following information: Bonds Issued = $3,400,000 par Maturity Period = 20 yearsInterest…

Q: Moss Co. issued $450,000 of four-year, 11% bonds, with interest payable semiannually, at a market…

A: Present value of bonds payable = Present value of interest payments + Present value of principal n…

Q: Moss Co. issued $101,000 of five-year, 12% bonds with interest payable semiannually, at a market…

A: A bond is a debt instrument that is issued by the organization to raise the funds from the investor…

Q: On January 1, Elias Corporation issued 10% bonds with a face value of $67,000. The bonds are sold…

A: Discount on bonds = Face value of bonds - Issue price of bonds = $67,000 - $64,990 = $2,010…

Q: On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for…

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest…

A: Calculation of Amount of Bond Discount:The bond premium is $10,087 for six months. The bond premium…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: On 1 April, year 1, Happy Corporation issues $50 million of 10%, 30-year bonds payable at par.…

A: Journal entry to record first cash payment to bondholders:

Q: On March 1, 2011, Fast Freight Company sold Rs. 400,000 of its 9 percent, 20-year bonds at 109.9.…

A: Amortization Schedule Date Interest payment Interest Expense Amortization of premium Balance in…

Q: Garcia Company issues 12.0%, 15-year bonds with a par value of $460,000 and semiannual interest…

A: A bond is a loan taken by a company on which a specific percentage of interest has to be paid over a…

Q: Enviro Company issues 8%, 10-year bonds with a par value of $340,000 and semiannual interest…

A: Journal is the primary book where transactions of a company are originally recorded. Further, a…

Q: Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and…

A: Present value: It refers to the current value of the sum of money or the series of cash flows that…

Q: onds pay interest semiannually on June 30 and December 31. If the bonds are retired at the end of…

A: Amortization of bonds refers to the process in which the carrying value of the bond is adjusted with…

Q: On January 1, a co. issues bonds dated Jan 1 with a par value of 330,000. the bond mature in 5…

A: The bonds are issued at premium when market rate is lower than the contract rate of bonds.

Q: Wookie Company issues 9%, five-year bonds, on January 1 of this year, with a par value of $109,000…

A: Number of periods = 5*2 = 10 Coupon rate= 9%/2 = 4.5% As the beginning carrying value is more than…

Q: Morgan Company issues 10%, 20-year bonds with a par value of $760,000 that pay interest…

A: Answer: Option 3.

Q: Wookie company issues 10% five year bonds on January 1 of this year with a par value of $200,000 and…

A: The issue of bond is a practice to raise loan for companies. The investor promises to pay the…

Q: On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $150,000, 8…

A: Interest Expense : Carrying value x 9% Cash Paid : 150,000 x 8% Discount Amortized : Interest…

Q: Paulson Company issues 9%, four-year bonds, on January 1 of this year, with a par value of $101,000…

A: Solution A - The issuance of…

Q: Moss Co. issued $101,000 of five-year, 12% bonds with interest payable semiannually, at a market…

A: Given information: issue price of the bonds $101,000 interest rate 12% effective interest…

Q: On January 1, Boston Enterprises issues bonds that have a $1,650,000 par value, mature in 20 years,…

A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Q: Wayne Company issued bonds with a face value of $1,020,000, a 10% stated rate of interest, and a…

A: Working: Issue price of the bond=$1,020,000×1.06=$1,081,200 Face value = $1,020,000 Premium on bond…

Q: On January 1 of this year, Cunningham Corporation issued bonds with a face value of $200,000 and a…

A: DISCLAIMER: MARKET RATE IS NOT PROVIDED FOR CALCULATING AMORTIZATION THOUGH I PROVIDED YOU WITH ITS…

Q: On January 1, the Ryan Company issued $400,000 of 6%, 6-year bonds when the market rate of interest…

A: The cash collected from the issue of bonds is referred to as bond proceeds.

Q: The Wilfred Company sold 8% bonds, dated January 1, with a face amount of $90 million on January 1,…

A: Issue Price of the bonds = Present value of principal + Present value of interest payments = face…

Q: Enviro Company issues 10%, 10-year bonds with a par value of $300,000 and semiannual interest…

A: The bonds are the financial instruments for the business. The bonds are issued by the business at…

Q: Whiteside Corporation issues $500,000 of 9% bonds, due in 10 years, with interest payable…

Q: Snap Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $100,000…

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $90,000…

A: Given information is: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a…

Q: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000…

A: Given information is: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a…

Q: On January 1, Topeka Outfitters issued $175,000 of 6%, 3-year bonds when the market rate of interest…

A: Given: Face value = $175,000 Years = 3 Coupon rate = 6% Interest rate = 10%

Q: Paulson Company issues 10%, four-year bonds, on January 1 of this year, with a par value of $98,000…

A: Semiannual Interest payment = Par value of bonds x rate of interest x no. of months/12 = $98000 x…

Q: Moss Co. issued $42,000,000 of five-year, 11% bonds, with interest payable semiannually, at a market…

A: Present Value: The value of today’s amount expected to be paid or received in the future at a…

Q: Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $110,000…

A: Solution A journal is a company's official book in which all business transaction are recorded on…

Q: I'm having trouble setting up the journal entry and i'm unsure of the calculations i am supposed to…

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: On January 1, assume that Comcast issues $300,000 of 15-year, 10% bonds payable for $351,876,…

A: Solution 1: Issue price of this bond = Proceeds from bond issued = $351,876

Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…

A: When business entity is in need of cash, it issues Debenture to finance from outsiders and for using…

Q: Wookie Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $200,000…

A: Bond: - Bond is a written agreement in which the issuer is obligated to pay a specified amount at…

Q: On January 1, Boston Enterprises issues bonds that have a $1,900,000 par value, mature in 20 years,…

A: Journal entry: A journal entry is used to record day-to-day transactions of the business by debiting…

Question

Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments.
On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of
1171⁄4. Prepare the journal entry for the issuance of these bonds for cash on January 1.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date. Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold at 113.55, what amount was received upon issuance?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Piedmont Corporation issued $200,000 of 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the first interest payment to the bondholders?
Pinetop Corporation issued $150,000 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the sale of the bonds?
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000 are to be made annually. If the company received proceeds of $112,300, how would the bonds issuance be quoted? A. 1.123 B. 112.30 C. 0.890 D. 89.05