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Manal Elkhoshkhany
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On Oct.1, 2010 Macklin issued 5%, 10 year bonds with a face

Customer Question

On Oct.1, 2010 Macklin issued 5%, 10 year bonds with a face value of $1,000,000 at 104. Interest is paid on Oct. 1 and April 1, with any discounts or premiums amortized on a straight line basis. What would the entry be to record the issuance?
I'm having trouble with my calculations, I don't know where I'm going wrong.
My options are:
a. CR $25,000 to interest payable
b. CR $40,000 to discount on bonds payable
c. CR $960,000 to bonds payable
d. CR $40,000 to premium on bonds payable.
Submitted: 5 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 5 years ago.

Hello sam

 

Please note that my id is "BusinessTutor" not "bizhelp", you have addressed your question to the wrong expert which is why I was late getting back to you. Please click on the following link:

 

http://www.box.com/s/7q6u57onua6hpelukb8k

 

 

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

 

Thank you

Manal Elkhoshkhany and 2 other Homework Specialists are ready to help you
Customer: replied 5 years ago.
If using the same information above, what would the bond interest expense reported on the Dec. 31 income statement be?
a. $11,500
b. $12,500
c. $13,500
d. $23,000
I am not coming up with any of these answers.
Expert:  Manal Elkhoshkhany replied 5 years ago.
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Customer: replied 5 years ago.
Thank you, XXXXX XXXXX dividing the 5% by 2 for the semiannual payments. Thats where I was going wrong.
Expert:  Manal Elkhoshkhany replied 5 years ago.

Oh :)

 

You could have still done that, but then the following calculations would be much longer :)

 

 

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