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FB2100 Chapt10_solutions_Ex10-1,DQ1-2,QS 10-8

FB2100 Chapt10_solutions_Ex10-1,DQ1-2,QS 10-8 - 153,000...

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FB2100 – Accounting I – Semester A 2010 Solutions to Assigned Questions – Chapter 10 DISCUSSION QUESTIONS 1. A bond is a liability of the issuing company. A share of stock represents an ownership interest in the company. 2. Notes payable generally involve borrowing from a single creditor, whereas bonds payable are usually sold to many different lenders (bondholders). Exercise 10-1 (15 minutes) 1. Semiannual cash interest payment = $3,400,000 x 9% x 1/2 = $153,000 2. Journal entries 2011 (a) Jan. 1 Cash .............................................................. 3,400,000 Bonds Payable ....................................... 3,400,000 Sold bonds at par. (b) June 30 Bond Interest Expense ................................ 153,000 Cash ........................................................ 153,000 Paid semiannual interest on bonds. (c) Dec. 31 Bond Interest Expense ................................
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