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On the First Day of the Fiscal Year, a Company

question 179

Essay

On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5 year bond that pays semi-annual interest of $35,000 ($1,000,000 × 7% × 1/2), receiving cash of $884,171. Journalize the entry to record the issuance of the bonds.


Definitions:

Marginal Costs

The added cost incurred when one more unit of a good or service is produced.

Marginal Benefit

The additional pleasure or utility gained when one more unit of a good or service is consumed.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service.

Opportunity Costs

The forfeiture of possible benefits from other options when selecting a specific choice.

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