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Need help with bonds.

 
 
Kareem
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      02-23-2004, 01:28 AM
A company issued at 98, $1 million 8% bonds. Assume the bonds were issued on
January 1 and pay interest on June 30 and Dec 31. The bonds mature in 20
years. What is the journal entry for issuing the bonds?

Is it:

cash 980,000
disc 20,000
bonds payable 1,000,000

Or do you use the tables (present amount of an ordinary annuity & present
amount of a single sum) to figure out the present interest and principal
amounts and record that number under cash? I've tried it, but the numbers I
get for the carrying amount (present value) aren't anywhere close to
980,000, they're more like 828,000.

Help...



 
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