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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT

In June 2020, Front Row Entertainment had the opportunity to expand its venue operations by purchasing five different venues. To finance this purchase. Front Row issued $1,500,000 of 6%, 5-ycar bonds on July 1, 2020. The bonds were issued for $1.378,300 and pay interest semiannually on June 30 and December 31.

Required:

  1. Prepare the journal entry to record the bond issue at July 1, 2020.

To determine

Concept introduction:

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.

Amortization of Bonds premium or discount:

Bonds may be issued at a premium or discount. The premium or discount on issue of binds is amortized or the life of bonds using the straight line or effective rate methods.

To prepare:

The journal entry to record the issuance of the bonds.

Explanation

The journal entry to record the issuance of the bonds is explained as follows:

Journal Entries
Date Account Titles Debit Credit
Jul...

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