2) A company issued 9%, 10-year bonds with a par value of $100,000. Interest is paid...

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2) A company issued 9%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate o

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Answer 1

Answer #1

1) Journal entry

Date	account and explanation	Debit	Credit
Jan 1	Cash	95016
	Discount on bonds payable	4984
	Bonds payable		100000

Interest paid = 100000*9%*6/12 = $4500

2) Journal entry

Date	account and explanation	Debit	Credit
Jan 1	Cash	103769
	Premium on bonds payable		3769
	Bonds payable		100000

Interest paid = 100000*12%*6/12 = $6000

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Answer 2

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