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Bond Issuance Journal Entry

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On January 1, 2010, Kentwood Company issued bonds with a face value of $800,000. The bonds carry a stated interest of 7% payable each January 1 and July 1.

a. Prepare the journal entry for the issuance assuming the bonds are issued at 97.

b. Prepare the journal entry for the issuance assuming the bonds are issued at 102

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Solution Preview

The excel is attached.

A) The journal entry will be:

Debit Cash - ...

Solution Summary

The solution prepares journal entry for bond issue at discount and at premium.

$2.19
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Bond issue price and interest

Calculate the issue price of a $1,500,000 bond issue and preparing the journal entries of the issuance and first years interest payments using the effective interest method. The bonds are paid semiannually on Jun 30 and December 31.

The first is a 12 year, 8 percent bond issue with a market interest rate of 12 percent.

The second is a 12 year, 8 percent bond issue with a market interest rate of 6 percent.

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