Free Solved On January 1, 2018, White water issues $420,000 of 6% bonds, due in 20 years, with interest payable on June 30 and December 31 each year.


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Step 1 of 2

The category of accounting known as financial accounting is focused on reporting, reiterating and analyzing business-related financial transactions.

Explanation:

Based on financial data and analysis, financial accounting empowers corporations to make strategic decisions with respect to pricing, cost management, and investments.

Step 2 of 2

  1. Preparing entries for issue of bonds:
Date Account Debit Credit
January 1, 2018 Cash $375,153
Discount on Bonds Payable $44,847
Bonds Payable $420,000

Recording the first semiannual payment:

Date Account Debit Credit
December 31, 2018 Bond Interest Expense $12,600
Discount on Bonds Payable $330
Cash $12,930

Recording the second semiannual payment:

Date Account Debit Credit
December 31, 2018 Bond Interest Expense $12,600
Discount on Bonds Payable $330
Cash $12,930

Explanation:

The procedure utilized to include transactions pertaining to bonds in the financial records is known as bond accounting.

Final solution

Discount on bonds- $44,847 and Interest payable- $12,930.

 

 

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