Question 2 A Massy Company issued $4,000,000 of 10-year, 11% bonds on January 4, 2021. The bonds pay interest semiannually on June 30 and December 31. The current market rate of interest is 10%. Required: (i) Calculate the selling price of the bond. (ii) Prepare the journal entries for the issuance of the bonds. (iii) Prepare the journal entries for the amortization on the Premium/Discount on the bonds.
FINANCIAL CALCULATORS TO TWO DECIMAL PLACES
Question 2 A
Massy Company issued $4,000,000 of 10-year, 11% bonds on January 4, 2021. The bonds pay interest semiannually on June 30 and December 31. The current market rate of interest is 10%.
Required:
(i) Calculate the selling price of the bond.
(ii) Prepare the journal entries for the issuance of the bonds.
(iii) Prepare the journal entries for the amortization on the Premium/Discount on the bonds.
(iv) Prepare the journals for interest payment on the amortization of the premium or discount.
(v) Prepare the journal entries if the bonds are redeemed at maturity.
(i)
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Selling price of bond |
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(ii)
This bond is selling at a
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The premium/discount on this bond is
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Bonds Payable |
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(iii) Journal Entry for Amortization of Premium/Discount
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(iv) Journal Entry for interest payment:
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Cash |
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(v) Journal entries of Bonds redeemed at maturity
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