On the First Day of the Current Fiscal Year, $1,500,000

question 159

Essay

On the first day of the current fiscal year, $1,500,000 of 10-year, 8% bonds, with interest payable semiannually, were sold for $1,225,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)First semiannual interest payment
(record as separate entry from discount amortization).
(c)Amortization of bond discount for the year, using the straight-line method of amortization.

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Definitions:

Standard Cost Card

A document that details the expected costs associated with the production of a product, including direct materials, direct labor, and overhead costs, used for budgeting and variance analysis.

Variance Columns

Columns in financial reporting and analysis designed to show the difference between actual results and budgeted, planned, or standard figures, helping identify areas of over or underperformance.

Raw Materials

Basic materials and substances used in the initial stages of production before undergoing further processing or manufacturing.

Materials Price Variance

The difference between the actual cost of raw materials and the expected (or standard) cost, which can indicate purchasing efficiency.