Explore BrainMass

# Shor Company: Calculate and prepare Bond Journal Entries

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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.

#### Solution Preview

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.

\$2.19