McDonald Sales prepared a bond issue of $20,000 dated January 1, 2013. The bonds have a stated rate of 3% and a term of 6 years. The bond issue was delayed, and the bonds were finally sold on March 1, 2013 at par. Please provide the journal entry for the issue of the bonds on March 1, 2013.
Definitions:
Coupon Bonds
Bonds that pay periodic interest payments to the holder based on a fixed interest rate (the coupon rate) until maturity, at which point the principal is repaid.
Effective Annual Rate
The interest rate on an investment or loan that is compounded annually, indicating the actual annual return taking into effect compounding over the year.
Real Return
The yield on an investment once inflation adjustments have been made.
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