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Question

On Jan. 1, 2011, a company issued the following bonds:

Par Value: $800,000 , Stated Interest Rate: 9% , Interest Dates: 6/30 and 12/31

Maturity Date : Dec. 31, 2030 (20 years)

On June 30, 2011, the issuer of the bond pays the first semiannual interest payment.

On December 31, 2030, the bonds mature and the issuer of the bond pays face value to the bondholders.

Required : Prepare journal entries to record transactions 


After you solve the questions your answer must include the following items :

-        Explain in details the journal entries ( why its recorded in debit or credit side ) and the nature of account Dr or Cr and its classification Assets , liabilities , owner's equity , Revenue or expenses .

-        Define The bonds and its advantages and disadvantage .

-        Compare between bonds and shares .

-        Explain the financial leverage .

Step-by-step answer

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Subject: Accounting, Business

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