Question

On January 1, Year 1, St. Clair Corporation issues 7%, 11-year bonds with a face amount of $90,000 for $83,497. The market interest rate is 8%. Interest is paid semiannually on June 30 and December 31. Complete the necessary journal entry for the issuance of the bonds by selecting the account names from the drop-down menus and entering the associated dollar amounts

Required:
Record the issuance of 7%, 11-year bonds with a face value of $90,000 for $83,497.

Answer 1

Answer:

Dr Cash for $83,497,

Dr Discount on Bonds payable $6,503

Cr Bonds Payable $90,000

Explanation:

Preparation of the necessary journal entry for the issuance of the bonds

Dr Cash for $83,497

Dr Discount on Bonds payable $6,503

($90,000-$83,497)

Cr Bonds Payable $90,000

(To record issuance of bonds)