Goodway Corporation sold $100,000 worth of bonds to raise money for plant expansion. The bonds pay interest annually at 3.5% for 5 years. The market rate of interest for a similar instrument was 3%; therefore, the bonds sold for a premium at $102,290. Required: 1. Journalize the entry to record the sale of the bonds. (Select the account from the dropdown menu) Date Accounts and Explanations Debit Credit 2. Journalize the entry to record the first interest payment and bond premium amortization. (Select the account from the dropdown menu) Goodway uses the straightline method to amortize bond premiums. Date Accounts and Explanations Debit Credit
Goodway Corporation sold $100,000 worth of bonds to raise money for plant expansion. The bonds pay interest annually at 3.5% for 5 years. The market rate of interest for a similar instrument was 3%; therefore, the bonds sold for a premium at $102,290. Required: 1. Journalize the entry to record the sale of the bonds. (Select the account from the dropdown menu) Date Accounts and Explanations Debit Credit 2. Journalize the entry to record the first interest payment and bond premium amortization. (Select the account from the dropdown menu) Goodway uses the straightline method to amortize bond premiums. Date Accounts and Explanations Debit Credit
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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Question
| Goodway Corporation sold $100,000 worth of bonds to raise money for plant expansion. | ||||||||||||
| The bonds pay interest annually at 3.5% for 5 years. The market rate of interest for a similar instrument | ||||||||||||
| was 3%; therefore, the bonds sold for a premium at $102,290. | ||||||||||||
| Required: | ||||||||||||
| 1. |
||||||||||||
| Date | Accounts and Explanations | Debit | Credit | |||||||||
| 2. Journalize the entry to record the first interest payment and bond premium amortization. (Select the account from the dropdown menu) | ||||||||||||
| Goodway uses the straightline method to amortize bond premiums. | ||||||||||||
| Date | Accounts and Explanations | Debit | Credit | |||||||||
|
|
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