1. The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is: a. debit Bonds Payable, credit Cash.
How do you record issuance?
To record bonds issued at face value plus accrued interest. This entry records the $5,000 received for the accrued interest as a debit to Cash and a credit to Bond Interest Payable. To record bond interest payment. This entry records $1,000 interest expense on the $100,000 of bonds that were outstanding for one month.
How do you record issuance of a bond?
The entry to record the issuance of the bonds is:
- Debit Cash for $98.5 million.
- Debit Bond Discount for $0.5 million.
- Debit Bond Issue Costs for $1 million.
- Credit Bonds Payable for $100 million.
What is the journal entry for recording the bond maturity?
When the bond comes to maturity, the face value is given to the investor in cash. The journal entry for recording the maturation of a bond calls for a credit to Cash and a debit to Bonds Payable, both in the amount of the bond’s face value.
What is the adjusting entry to record the amortization of a discount on bonds payable?
Since a bond’s discount is caused by the difference between a bond’s stated interest rate and the market interest rate, the journal entry for amortizing the discount will involve the account Interest Expense.
When the market rate of interest is less than the contract rate of interest the bonds will sell?
premium
Question: When the market rate of interest is less than the contract rate for a bond, the bond will sell for a premium.
What is the journal entry for prepaid rent?
Effect of Prepaid Expenses on Financial Statements The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. These are both asset accounts and do not increase or decrease a company’s balance sheet.
How do you record bond issuance costs?
To account for the expenses associated with bond issuance, debit the debt issuance costs account and credit the accounts payable account to account for the associated liability. Since the debt issuance account is an asset account, the issuance costs will first be recorded in the balance sheet of the bond issuer.
