Sylvestor Company issues 12%, five-year bonds, on December 31, 2016, with a par value of $170,000...
Question:
Sylvestor Company issues 12%, five-year bonds, on December 31, 2016, with a par value of $170,000 and semiannual interest payments.
| Semiannual Period-End | Unamortized Discount | Carrying Value | |
| (0) | 12/31/2016 | $8,300 | $161,700 |
| (1) | 6/30/2017 | $7,470 | $162,530 |
| (2) | 12/31/2017 | $6,640 | $163,360 |
Use the above bond amortization table and prepare journal entries to record (a) the issuance of bonds on December 31, 2016; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.
Discount Bond:
When a financial bond is issued at a lesser price than its face value then such bonds are known as discount Bond. This is because lesser interest rates will make the bond a less desirable investment.
Answer and Explanation: 1
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View this answerSylvestor Company
Journal entries
| Date | Particulars | Debit ($) | Credit ($) | Calculation |
|---|---|---|---|---|
| Dec. 31, 2016 | Cash | 161,700 | ||
| Discount on bonds payable | 8,300 | |||
| Bon... |
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