Need help with bonds.

Discussion in 'Accounting' started by Kareem, Feb 23, 2004.

  1. Kareem

    Kareem Guest

    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...
     
    Kareem, Feb 23, 2004
    #1
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