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    Shor Company: Calculate and prepare Bond Journal Entries

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    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.

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    Solution Preview

    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 ...

    Solution Summary

    The expert calculates and prepares bond journal entries for Shor Company.