Park Corporation is planning to issue bonds with a face value of $700,000 and a coupon rate of 7.5 percent. The bonds mature in 6 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
1. I need help to prepare the journal entry to record the issuance of the bonds.
2. I need help to prepare the journal entry to record the interest payment on June 30 of this year.
3. What bond payable amount will Park report on its June 30 balance sheet?
Journal Entries: Jan 1 Cash (Debit) $667,623.62 . . . . . Discount on bonds payable (Debit) $32,376.38 . . . . . . . . Bonds... View the full answer