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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Cornerstone Exercise 9-24 Issuance of Long-Term Debt

EWO Enterprises issues $4,500,000 of bonds payable.

Required:

Prepare the necessary journal entries to record the issuance of the bonds assuming the bonds were issued (a) at par, (b) at 104.5, and (c) at 99.

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. Bonds may be issued at a premium or discount.

To prepare:

The Journal entries for issuance of bonds.

Explanation

The Journal entries for issuance of bonds are explained as follows:

EWO Enterprises
Journal Entries
# Account Titles Debit Credit
(a) Cash $ 4,500,000
Bonds Payable $ 4,500,000
(Being bonds issued at par)
(b) Cash (4500000*104...

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