On the First Day of the Current Fiscal Year, $2,000,000

question 144

Essay

On the first day of the current fiscal year, $2,000,000 of 10-year, 7% bonds, with interest payable annually, were sold for $2,125,000. Present entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)First annual interest payment
(record as separate entry from premium amortization).
(c)Amortization of bond premium for the year, using the straight-line method of amortization.

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Definitions:

Existing Copier

A copier machine that is currently owned or in use within an organization.

Evaluation

The process of examining and judging something's value, quality, or importance.

Net Working Capital

Net Working Capital is a measure of a company's short-term financial health, calculated as current assets minus current liabilities.

Present Value

The contemporary valuation of future financial inflows or a lump sum, adjusted for a specific rate of return.