Purchase Solution

Bond Journal Entries

Not what you're looking for?

Ask Custom Question

On January 1, 2005, Larkspur Corporation issued $500,000, 10%, 5-year bonds, at 98. The bonds pay semiannual interest on January 1 and July 1. The company uses the straight-line method of amortization and has a calendar year end.

Instructions
Prepare all the journal entries that Larkspur Corporation would make related to this bond issue through January 1, 2006. Be sure to indicate the date on which the entries would be made.

Purchase this Solution

Solution Summary

The solution explains the journal entries relating to bond issue.

Solution Preview

The amount raised is 500,000X.98 = 490,000. The discount on bonds payable is 10,000. The total periods are 10 and so the amortization using straight line is 10,000/10=1,000 per period.

Journal entry at the time of issue is
Jan 1 2005 Cash Dr ...

Purchase this Solution


Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Operations Management

This quiz tests a student's knowledge about Operations Management

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Learning Lean

This quiz will help you understand the basic concepts of Lean.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)