During the year Shor Company issued several series of bonds. For each bond, record the journal entry that must be made upon the issuance date (Round to the nearest dollar; a calculator is needed for 2 and 3.
1. On March 15, a 20-year, $5000 par value bond series with annual interest of 9 percent was issued. Three thousand of these bonds were issued at a price of 98. Interest is paid semiannually.
2. On January 20, a series of 15-year, $1000 par value bonds with annual interest of 88 percent was issued at a price given a current yield to maturity of 6.5 percent. Issuance costs for the 7,000 bonds issued were $250,000. Interest is paid annually.
3. On October 31, a 10-year, $1,000 par value bond series with annual interest of 7 percent was issued at a price to give a current yield to maturity of 8 percent. interest on the %, 000 bonds issued is paid semiannually.
Please see attached file for answers.
Transaction Date Account Debit Credit
1 Mar 15 Cash 14,700,000 (3,000 x $5,000 x 98%)
Discount on bonds payable 300,000
Bonds 15,000,000 (3,000 x $5,000)
2 Jan 20 Cash 7,987,280 ...
The expert calculates and prepares bond journal entries for Shor Company.